The frenzy over Chinese artificial intelligence is turning Alibaba Group Holding Ltd. into an investor favorite again, injecting new life into an e-commerce giant that had nearly sunk into obscurity following a years-long regulatory crackdown.

Alibaba stock rallied again in Wednesday morning trading, pushing shares of the China tech giant up toward a two-year high. A reported partnership with Apple is helping bolster confidence in Alibaba's AI strategy.

Due to local regulations, Apple needs a Chinese partner to offer its AI services in China. It had been expected to work with Baidu, but chose not to do so. Deepseek was also considered, but as a small start-up there were concerns it would not scale to meet Apple-driven demand.

Apple's deal to put Alibaba Group Holding's artificial intelligence (AI) models on the iPhone has Chinese developers buzzing about the potential of the partnership ahead of the US tech giant's conference in Shanghai next month.