Chinese stocks Alibaba Group (BABA), Baidu (BIDU), and BYD Co. (BYDDF) are back in the spotlight after a Bloomberg report said the Pentagon linked them to Chinese military activity. A letter sent to U.S. lawmakers in early October said the three companies, along with five others, should be added to the Section 1260H list, a watchlist of firms the U.S. believes support China’s military. The list doesn’t create direct penalties, but it signals caution to investors, funds, and U.S. partners.
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Deputy Defense Secretary Stephen Feinberg sent the letter on October 7, just weeks before President Trump and President Xi met on October 30, 2025, in South Korea and agreed to a short trade truce. The timing has raised questions about whether U.S.–China tensions could heat up again.
Alibaba Pushes Back and Calls the Claim Baseless
Alibaba quickly rejected the allegation, saying there is “no basis” for adding it to the list. The company said it is “not a Chinese military company” and does not take part in military-civil programs. It also noted that it does not work with the U.S. military, so being included would not change how it operates in the U.S. or globally.
China’s Foreign Ministry also criticized the move and called it unfair, warning that China would “take necessary measures” if needed to protect its companies.
The claims come as Alibaba is pushing deeper into AI and cloud services. Earlier this month, a White House memo reported by the Financial Times alleged the company had supported the Chinese military with technology tied to U.S. targets. Alibaba denied the memo and said the claims were “completely false” and part of a “malicious PR operation.”
Will This Listing Trigger a Market Reaction?
When Tencent (TCEHY) and CATL were added to the list in 2021, their stocks dropped quickly. There were no fines or direct penalties, but the move created fear in the market. For instance, some investment funds stepped back, banks tightened compliance checks, and a few U.S. tech partnerships slowed. It showed that being named alone can create pressure, even without formal restrictions.
That’s why investors are watching Alibaba, Baidu, and BYD closely now. All three are expanding in AI, cloud, robotics, and self-driving tech, areas already linked to U.S. export rules. If they are officially added to the list, partners and investors may step back until there is more clarity.
Which Chinese Stock Is the Best Buy?
Turning to Wall Street, all three stocks mentioned above show upside potential ahead. Alibaba and BYD both carry a Strong Buy rating, with upside estimates of about 25% and 39%, respectively. Baidu is rated Moderate Buy and shows an upside of around 27%.
Among the three, BYDDF shows the highest projected upside, while Alibaba and Baidu also have positive analyst sentiment and strong Smart Scores.
