Alibaba (BABA) Stock Plunges to 16-Month Low Amid AI Model Theft Claims

Key Takeaways

• Shares of Alibaba plunged up to 4.9% in Hong Kong trading, reaching their lowest level in 16 months
• Anthropic claims Alibaba gained unauthorized access to its Claude AI system through “distillation” techniques
• The AI company detailed these allegations in correspondence sent to White House officials and U.S. lawmakers
• Other Chinese tech firms including Baidu (BIDU) and Xiaomi (XIACY) saw declines exceeding 3%
• Year-to-date, Alibaba shares have tumbled 33%, prompting Nomura to slash its 2027 EBITA projection by 15%

Shares of Alibaba (BABA) reached their lowest point in 16 months during Thursday trading in Hong Kong following serious allegations from Anthropic regarding unauthorized access to its artificial intelligence technology.

Alibaba Group Holding Limited, BABA

The Chinese e-commerce and cloud computing behemoth saw its shares decline by as much as 4.9% during Hong Kong market hours. This follows a 3% drop in U.S.-listed shares on Wednesday. Year-to-date losses now stand at 33%.

According to Bloomberg reports, Anthropic dispatched correspondence to White House personnel and multiple U.S. senators this week, claiming that Alibaba has been conducting what it describes as an “industrial-sized” operation to gain illicit access to its Claude AI models.

The alleged technique, known as “distillation,” involves training an inferior AI system using outputs generated by a more sophisticated model. Anthropic maintains that this campaign was executed by entities connected to Alibaba and its artificial intelligence research division, Alibaba Qwen.

This isn’t the first instance where Anthropic has sounded the alarm on such activities. Back in February, the organization identified a comparable operation involving Chinese AI startup DeepSeek, along with two additional Chinese AI laboratories attempting to extract functionality from its Claude infrastructure.

DeepSeek gained significant attention in January 2025 following the launch of a budget-friendly AI model that disrupted the technology sector.

Broader Impact on Chinese Technology Stocks

The market reaction extended beyond Alibaba. Search engine giant Baidu (BIDU) experienced a decline exceeding 3%, while electronics manufacturer Xiaomi (XIACY) similarly dropped more than 3% as market participants retreated from Chinese AI-related equities across the board.

These movements signal increasing anxiety that Chinese technology enterprises may encounter more significant obstacles in the worldwide artificial intelligence competition, despite continuing to deliver competitively priced solutions.

Challenges Accumulating From Various Fronts

The timing of these accusations couldn’t be worse for Alibaba. The corporation is simultaneously grappling with sluggish domestic consumer spending and deteriorating investor confidence in Chinese internet companies.

Additionally, a sector rotation is underway—capital is flowing toward hardware and chip manufacturers in South Korea and Taiwan, draining resources from the Chinese tech space.

On the e-commerce front, Nomura analysts calculated that China’s June 18 shopping event experienced an 8% year-over-year decline in core e-commerce revenue. This performance fell significantly short of market consensus expectations for stable growth.

Consequently, Nomura reduced its projection for Alibaba’s 2027 EBITA by 15%.

Anthropic’s correspondence to U.S. government officials represents a significant escalation, transforming what might typically remain a legal or technical matter into a concern for Washington policymakers.

As of Thursday, Alibaba had not issued any public statement addressing these accusations.

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