• The Pentagon is poised to add [Alibaba (BABA (BABA))](https://www.roic.ai/quote/BABA) and other Chinese companies to its Section 1237 list of entities allegedly supporting China's military, potentially as soon as Friday, according to people familiar with the matter.
  • Listing could restrict U.S. investments and contracts with Alibaba, impacting its access to American capital and technology amid ongoing U.S.-China trade tensions.
  • Alibaba's (BABA) recent financial performance shows resilience with 5% year-over-year revenue growth in Q3 2025, but investments in quick commerce and user experience have pressured margins.

Efforts to navigate escalating U.S.-China tech tensions have hit a snag for Alibaba Group (BABA), with the U.S. expected to add the e-commerce giant to the Pentagon's blacklist of companies allegedly aiding China's military, according to sources who spoke on condition of anonymity. The move, which could come as soon as Friday, would mark a significant escalation in regulatory pressures on one of China's most prominent global corporations.

Without a deal to avert the listing, Alibaba would face new barriers to its international expansion, particularly in accessing U.S. markets and technology. The company's American depositary shares, which trade on the New York Stock Exchange under the ticker BABA, have already shown volatility in recent sessions amid speculation about the potential designation. U.S. investors hold significant stakes in Alibaba, and the listing could force divestment under current regulations.

Alibaba's financials reveal a company in transition. For the quarter ended September 30, 2025, revenue reached RMB 247.8 billion (approximately US$34.8 billion), up 5% year-over-year. However, income from operations plummeted 85% to RMB 5.4 billion, largely due to heavy investments in quick commerce initiatives and user experience enhancements. Adjusted EBITA fell 78% to RMB 9.1 billion, reflecting the strategic costs of maintaining growth in a challenging environment.

"What institutional investors are really focused on is regulatory stability," one market analyst noted, echoing concerns about the unpredictable nature of geopolitical crosscurrents. Alibaba has attempted to reach out to U.S. officials for clarity on the potential listing, but those efforts have so far been unsuccessful, according to individuals briefed on the discussions.

The Pentagon's Section 1237 list, formalized in the National Defense Authorization Act of 2020, prohibits U.S. dealings with firms accused of supporting China's military-industrial complex. Previous additions, such as Huawei and SMIC in 2020-2025, have faced severe export bans and investment restrictions. For Alibaba, which derives 65% of its revenue from China-based e-commerce platforms like Taobao and Tmall, the immediate impact might be more symbolic than financial, but the long-term implications could reshape its global strategy.

Alibaba's cloud computing division, which has been shifting toward high-margin AI products, could be particularly vulnerable if U.S. tech bans expand. The company's international commerce segment, however, has shown robust growth, with revenue up 31% in prior periods, suggesting potential resilience through diversification.

As filing deadlines loom, the situation remains fluid. Some industry observers suggest that last-minute negotiations could still alter the outcome, but sources indicate that the current trajectory points toward inclusion. The broader context includes parallel U.S. actions, such as recent chip curbs on Chinese tech firms, which have heightened tensions between the world's two largest economies.

In a brief statement, an Alibaba spokesperson declined to comment on the potential listing but emphasized the company's commitment to compliance and global cooperation. Meanwhile, market reactions have been muted but watchful, with trading volumes in BABA shares increasing slightly ahead of the expected announcement.

Correction: An earlier version of this article misstated the percentage decline in Alibaba's adjusted EBITA for Q3 2025. It fell 78%, not 75%. The article has been updated.