Alibaba shares fell sharply on Friday as investors reacted to a combination of artificial intelligence allegations, geopolitical concerns and weak e-commerce data.
The stock dropped 4.8% to HK$90.40 after briefly touching HK$89.20, its lowest level in 17 months.
Cathie Wood Funds Sell Alibaba Shares
Selling pressure increased after funds managed by Cathie Wood disclosed that they had sold Alibaba American Depositary Receipts on Thursday.
The sale added to concerns surrounding the Chinese technology company and contributed to weaker investor sentiment.
Anthropic Accuses Alibaba-Linked Operators
One of the main factors weighing on Alibaba stock was an accusation made by artificial intelligence company Anthropic.
In a letter sent to U.S. senators and White House officials, Anthropic alleged that operators connected to Alibaba’s Qwen AI laboratory created nearly 25,000 fraudulent accounts.
According to Anthropic, those accounts generated tens of millions of requests to its Claude AI model.
The company claimed that the activity targeted advanced Claude capabilities, including software engineering and agentic reasoning.
Anthropic described the alleged operation as the largest known AI model distillation attack it had encountered.
Alibaba’s response to the accusations was not included in the report.
Alibaba Challenges Pentagon Designation
Alibaba is also facing geopolitical and legal uncertainty in the United States.
The company filed a lawsuit against the U.S. Department of Defense this week. It is seeking removal from the Pentagon’s list of Chinese military companies.
The designation could expose Alibaba to possible investment restrictions and government procurement bans.
Investors are concerned that remaining on the list could further complicate the company’s access to U.S. capital and commercial opportunities.
Alibaba Stock Falls Far Below 2025 Peak
The combination of legal, geopolitical and reputational pressure has contributed to a significant decline in Alibaba shares.
The stock is now trading approximately 50% below its October 2025 peak of HK$186.20.
The latest controversies have given investors few reasons to buy the stock despite its steep decline.
Weak 618 Shopping Festival Adds Pressure
Alibaba also received little support from China’s 618 shopping festival.
The annual event is an important indicator of consumer demand and the health of the company’s core e-commerce operations.
Results from this year’s festival were reportedly weak, with sales growth slowing sharply.
The disappointing performance increased concerns about consumer spending and competition within China’s online retail market.
Hong Kong Stocks Face Wider Sell-Off
Alibaba’s decline came as the broader Hong Kong stock market remained under pressure.
The Hang Seng Index fell below the 23,000 level during the previous session as investors reduced exposure to Chinese technology companies.
Heavy selling by mainland Chinese investors also contributed to the negative market environment.
JD.com and Meituan Face Similar Challenges
Alibaba’s major competitors, including JD.com and Meituan, have also struggled amid intense competition in China’s e-commerce industry.
Their weakness provided no support for Alibaba shares.
Investors are now likely to focus on Alibaba’s response to Anthropic’s allegations, the outcome of its lawsuit against the Pentagon and signs of improvement in its e-commerce business.
