Alibaba and Baidu surge in Hong Kong after their AI partnership with Apple is confirmed

Hong Kong-listed shares of Alibaba and Baidu rose sharply on Thursday after both companies confirmed their participation in the rollout of Apple's artificial intelligence features in China. Alibaba shares advanced 5% after the company confirmed that its Qwen AI model will be integrated into Apple's services in the Chinese market, while Baidu's Hong Kong shares gained 4% as the company confirmed it is also collaborating with Apple on Apple Intelligence features for the iPhone in China. Alibaba's U.S.-listed shares had already closed slightly higher the previous night, after a company spokesperson told CNBC that 'Qwen will be integrated into the Apple Intelligence experiences within iOS, iPadOS, macOS and visionOS for users in China.'

According to that same Alibaba spokesperson, the combination of Apple and Qwen will allow users to access the model's capabilities, 'such as understanding and generating text and images, without needing to jump between tools.' Apple did not immediately respond to CNBC's request for comment on the deal.

The market movement came after the Cyberspace Administration of China published a notice on Wednesday confirming the license for Apple Intelligence, including it alongside six other smartphone-based AI services —among them that of Huawei Technologies— on a list of approved service providers in the country.

In Baidu's case, the news also comes in a context in which, according to reports from late June, its AI chip unit, Kunlunxin, is reportedly seeking a Hong Kong IPO that could value that subsidiary at $50 billion.

The article frames this episode within the intensifying technological rivalry between China and the United States over leadership in artificial intelligence: Washington has sought to restrict China's access to high-end semiconductors, while Beijing has tried to limit U.S. investments in its tech companies. In that regard, it cites a report from the research organization RAND stating that 'leadership in AI is becoming central to economic competitiveness, the setting of global standards and the preservation of democratic governance.'

Overall, the news suggests that Apple has chosen to partner with local AI providers —Alibaba and, apparently, Baidu as well— in order to offer Apple Intelligence features in China while complying with local regulation, a move the market interpreted as a significant validation for both Chinese companies and that translated into notable gains for their Hong Kong shares.