Apple's potential partnership with Alibaba Group to roll out its artificial intelligence features in China could serve as a significant growth catalyst for the iPhone manufacturer in this key market, as analyzed in a recent client note from Wedbush Securities. Recently, Alibaba Chairman Joe Tsai mentioned at the World Governments Summit that the Chinese e-commerce giant will collaborate with Apple to introduce AI features specifically for iPhones sold in China.
This announcement is pivotal, as China has been a substantial challenge for Apple over the past year, with the tech giant losing market share to local competitor Huawei, according to insights from Wedbush. Analysts express 'growing confidence' that Apple's AI enhancements will be available in the June quarter, a timing they believe is strategic. Wedbush estimates that out of approximately 200 million iPhones in China, over 100 million are positioned for potential upgrades.
The experience with Apple Intelligence, introduced in the iPhone 16 model, showcased its efficacy as a driver for upgrades in the US market, and a similar outcome is anticipated with the forthcoming features in China. The report includes an estimate that approximately 25% of the global population will eventually utilize AI through an Apple device within the next few years.
The Wedbush analysts, led by Daniel Ives, opined that 'Alibaba is taking the lead in the broader AI and cloud narratives in China, and with additional stimulus expected from Beijing, this is the ideal partnership for Apple at the right time.' Apple's initiative to launch its AI capabilities in China unfolds amid President Donald Trump's imposition of tariffs on the country, which in turn has retaliated with duties on US products.
Despite the existing US-China tensions, Wedbush analysts anticipate that Apple and Chief Executive Tim Cook will strategically navigate their growth agenda in China. Wedbush has upheld an outperform rating on Apple's stock while maintaining a 12-month price target of $325, with the assertion, 'We believe starting in the June quarter, growth will resume in this flagship region, aided by more favorable comparisons leading into Fiscal 2026.' In addition, Apple recently revealed its plans to invest over $500 billion in the US over the next four years, including the establishment of an AI server factory in Texas..