Alibaba Group (BABA) shares fell Tuesday following signals from China's top leadership that suggest the country's consumer demand remains weaker than hoped.

What's Behind the Decline

China's Politburo announced plans to expand domestic demand and take a more proactive stance on economic stimulus policies next year, according to Reuters. That sounds positive on the surface, but here's the thing: when officials emphasize the need to boost demand, it's usually because demand needs boosting. The announcement hints that Chinese consumers aren't spending as robustly as the government would like, which naturally weighs on companies like Alibaba that depend on domestic consumption.

Alibaba wasn't alone in the selloff. Other U.S.-listed Chinese companies including Baidu and Bilibili also traded lower, reflecting broader concerns about China's economic trajectory.

Adding to the uncertainty, the Financial Times reported Tuesday that China may restrict access to Nvidia's recently reinstated H200 chips, even though President Donald Trump had approved their export to China. The potential limitation creates another layer of concern for investors watching China's tech sector.

Alibaba's AI Push Continues

Despite Tuesday's downturn, Alibaba has been aggressively expanding its AI footprint. The company recently became the cloud infrastructure provider for Ryt Bank and established a new partnership with the energy subsidiary of Malaysia's national carmaker. In Hong Kong, Alibaba launched an initiative offering newly registered businesses and developers free three-month access to its advanced AI models, including the Qwen large language model and Wan video generation platform.

The Qwen app itself posted impressive growth numbers last week, reaching 18.34 million monthly active users in November—a 149% jump from October.

The Bottom Line

Alibaba shares were down 1.59% at $155.57 at the time of publication, according to market data.