Alibaba Shares Hit a 16-Month Low After Anthropic Accuses It of AI Data Theft
Alibaba's Hong Kong-listed shares fell more than 4.5% on June 25, 2026, hitting HK$94.55, their lowest level in 16 months. The drop pushed the company's market value below HK$2 trillion, or roughly US$255 billion. The immediate trigger was an explosive accusation from US artificial intelligence company Anthropic, which alleged that Alibaba ran a coordinated campaign to steal proprietary AI capabilities from its Claude models.
Anthropic alleged that Alibaba created approximately 25,000 fraudulent accounts and used them to interact with Claude millions of times in what the company described as “the largest known distillation attack” ever recorded against an AI model. The Wall Street Journal first reported the accusation. Alibaba has not publicly confirmed the allegations.
What the Distillation Accusation Means
A distillation attack involves querying a competitor's AI model at scale to extract its reasoning patterns and training signals, then using that data to improve your own models. It is a form of competitive intelligence gathering that sits in a legal grey area, and Anthropic's public framing of it as an attack signals the company intends to pursue the matter beyond an internal policy complaint.
The accusation carries weight beyond the immediate stock reaction because it connects to a broader narrative about Chinese AI companies and their development practices. Alibaba's AI arm has been building aggressively, and its Qwen model family has attracted significant attention from Western researchers for its performance relative to its stated training costs. Accusations of this scale, if substantiated, would raise serious questions about how that performance was achieved.
For now, no formal legal action has been confirmed. Anthropic has shared its findings with law enforcement, according to the Wall Street Journal report, but the outcome of any investigation remains unclear.
The Stock Was Already Under Pressure Before June 25
The Anthropic accusation accelerated a decline that had already been building for weeks. Alibaba shares fell approximately 25% over the 30 days preceding June 26, sliding from around $126 to approximately $94. Several factors drove that broader decline before the distillation story broke.
Alibaba reported a significant earnings miss for its fiscal first quarter of 2026. Non-GAAP earnings fell sharply year over year, and operating income dropped from RMB35.2 billion to RMB5.4 billion, a compression driven by aggressive spending on AI infrastructure and competitive subsidies in its core ecommerce business. Free cash flow turned deeply negative, driven by an 80% year-over-year increase in capital spending.
The US Department of Defense also designated Alibaba as a “Chinese military company” in the weeks before the stock drop, a designation that can trigger procurement bans and investment restrictions and tends to weigh on sentiment among institutional investors outside China.
High-profile investors added to the pressure. Cathie Wood's ARK Invest and Michael Burry both disclosed selling Alibaba positions in late June, amplifying bearish sentiment at a time when the stock was already near multi-year lows.
The Competitive Pressure Behind the Numbers
The earnings weakness reflects a structural problem that predates the AI spending push. PDD Holdings and ByteDance's Douyin have been taking share from Alibaba's Taobao and Tmall platforms for several years. Douyin's gross merchandise volume grew 46% year over year between August 2023 and July 2024, while Taobao and Tmall posted only 5% GMV growth in the same period. Alibaba's share of China's online retail GMV has fallen from 72% to 62% in recent years, and analysts see the trend continuing as Douyin expands deeper into search-based ecommerce.
Alibaba's response has been to invest heavily in AI and instant commerce infrastructure, including a plan to build or expand warehouses across 31 Chinese cities to enable four-hour grocery deliveries. Those investments cost money in the short term and have not yet translated into a reversal of the market share trend. New Chinese ecommerce regulations requiring platforms to reduce merchant fees add further pressure on margins.
What Analysts Think Despite the Sell-Off
Despite the steep decline, Wall Street analysts have not abandoned Alibaba. The consensus rating among analysts tracking BABA remains Strong Buy, with a median 12-month price target near $190 on the US-listed ADR, implying significant upside from the current trading range. The gap between analyst targets and current prices reflects a belief that the market is pricing in too much risk, rather than a fundamental reassessment of Alibaba's long-term position in cloud and ecommerce.
Alibaba's Cloud Intelligence Group grew external revenue 40% in its most recent quarter, with AI-related products accounting for 30% of that revenue and posting triple-digit growth for the eleventh consecutive quarter. Those numbers show that the AI investment is generating real demand, even as the costs of that investment weigh on near-term profitability.
For sellers and brands doing business with Chinese platforms or tracking Asia-Pacific ecommerce trends, the Alibaba situation is worth watching as a signal of where competitive intensity in Chinese ecommerce is heading. Any platform losing ground to PDD and Douyin while simultaneously absorbing AI infrastructure costs and geopolitical risk is a platform under genuine stress, regardless of what its long-term potential looks like.
