By George Glover
The Pentagon listed Alibaba as a company that is aiding China's military on Monday. The online retailer's shares appeared to shrug off the Defense Department's move -- but plenty of worries remain for investors.
Alibaba's American depositary receipts climbed 1.5% to $121.89 in early trading on Tuesday, having slid 0.8% the previous session.
The stock was down 18% for the year through Monday's close. Alibaba is ramping up its artificial-intelligence efforts, but investors are worried the company's aggressive spending plan will drag down its bottom line.
Alibaba's adjusted earnings before interest, taxes, depreciation, and amortization slumped 56% from a year ago to 76.4 billion Chinese yuan ($11.3 billion) in fiscal 2026 as it plowed more money into AI.
The company has also been locked in a price war with rivals such as JD.com and Temu parent PDD, and investors are worried the fierce battle will weigh on its margins.
The ADRs have struggled to hold above $120 in recent trading sessions, and losses could accelerate if they break below that level.
The Defense Department on Monday added Alibaba to its list of what it calls Chinese military companies.
"Alibaba is not a Chinese military company nor part of any military-civil fusion strategy. We will take all available legal action against attempts to misrepresent our company," a company spokesperson said.
Investors shouldn't worry about the list, which relates to Defense Department procurement. Alibaba doesn't have a contract with the Pentagon and has been on and off the list before.
"The inclusion to the DoD list is unlikely to translate into revenue or earnings impact," Citi analyst Alicia Yap said in a research note.
"Judging from the relatively muted share-price reaction...We believe most investors are aware that inclusion to this list does not necessarily result in actual sanctions or affect fundamental business operations," she added.
Search-engine provider Baidu and electric car maker BYD were among the other Chinese companies the Defense Department designated as military companies. Like Alibaba, both said they didn't belong on the list.
Write to George Glover at george.glover@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 09, 2026 10:15 ET (14:15 GMT)
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