Alibaba Group Holding Ltd said that the U.S.'s National Basketball Association will use the tech giant's cloud services for its digital operations in China, according to a Reuters report on Wednesday.

The NBA, the world's largest basketball league, is the first prominent U.S. client for the Chinese tech giant, marking a shift in the status quo.

Alibaba's cloud services are used by only a handful of mid-size American firms, such as Citrix and EPAM Systems, according to Alibaba Cloud's customer success page. It does not mention any Fortune 500 companies.

Why The Tie-Up Matters

The deal is significant also because the U.S. is deterring technology collaboration in another area: semiconductors. America has barred sales of high-end chips to China, citing national security concerns and the desire to maintain a technological edge.

Under the agreement, Alibaba will develop applications to enhance fan experiences on the NBA app in China, and NBA China will leverage Alibaba's technologies, including a proprietary AI model based on the Qwen series of foundational models.

The multi-year deal makes Alibaba Cloud the official cloud computing and AI partner for NBA China, according to Alibaba, which did not disclose the financial terms.

The partnership comes after the NBA signed an 11-year deal for its U.S. broadcasting rights, worth $77 billion, last year. It ditched its long-time partner, TNT Sports, now owned by Warner Bros Discovery, for joint licenses with Walt Disney's ESPN, Comcast-owned NBCUniversal, and Amazon Prime Video.

In China, Tencent holds the broadcast rights to the NBA games.

Cloud With Silver Linings

The development is another win for Alibaba Cloud, which has powered Alibaba Group's earnings and stock this year. AliCloud is poised to evolve into a super AI cloud player, supported by its global footprint, strong financials, and competitive full-stack AI capabilities across models, infrastructure, chips, and software, Deutsche Bank said in a recent investor note.

On Stocktwits, the retail sentiment for BABA was 'bearish' as of late Wednesday. The company's shares have gained 116% year-to-date.

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