According to a recent report in the Financial Times, Google and OpenAI sold advanced AI models to a Singapore-based subsidiary of a Chinese company banned by the US Department of Defense. The companies in question include Alibaba, Baidu, and Tencent Holdings. According to a report in the Financial Times, both Google and OpenAI have admitted that they provided AI services to the Chinese company’s Singapore affiliate.
Why were US AI companies able to do business with banned Chinese companies?
Alibaba, Baidu, and Tencent Holdings are on the Department of Defense’s 1260H list. This is a list of companies that the US government claims have ties to the Chinese military. Despite its Chinese origin, the Financial Times report points out that transactions between OpenAI, Google, and Chinese companies are legal. Current U.S. regulations do not outright prohibit Chinese-based companies from using advanced U.S.-based AI models outside of mainland China.
This development could lead to the US introducing stricter regulations on the use of AI for sanctioned and prohibited companies. OpenAI told the Financial Times that it is blocking direct access to its AI models from mainland China. However, it does allow some Chinese-owned companies to use their services in other jurisdictions where appropriate safeguards can be enforced.
Let’s discuss whether the stock price of Alphabet (Google’s parent company) will fall in response to this revelation.
Will Google’s stock price fall after selling its AI models to Chinese companies?
Alphabet (GOOG) has already seen negative price action in the premarket. Google closed 0.69% (2.47 points) lower at its closing price on July 9, 2026. The stock was down another 0.29% (1.04 points) in pre-market hours. Investors may be reacting to the Financial Times report.
Google stock could fall further after the market opens today.
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