Alibaba shares surge 7% after unveiling new AI model
Alibaba stock climbs 7% on AI model announcement
Alibaba Group Holding Ltd. has taken a major step in the AI race, unveiling the QwQ-32B model, which it claims outperforms DeepSeek’s R1 while using just a fraction of the data.
The model, open-sourced on Thursday, represents a significant leap over its predecessor, requiring only 5% of the parameters needed by DeepSeek's R1. This breakthrough has led to a surge in Alibaba’s stock, which rose as much as 7.6% in Hong Kong, marking the largest single-day gain in nearly two weeks, reports Bloomberg.
A Strong Year for Alibaba
Alibaba’s recent stock surge is part of a broader recovery, with the company gaining approximately $135 billion in market value this year. This rebound follows a turbulent period marked by a government crackdown on tech giants.
However, with growing support from Beijing and a stronger position in the AI space, Alibaba is seen as a key player in China's technological future. Investors are increasingly optimistic about Alibaba’s ability to capitalize on the country’s push to enhance AI infrastructure and consumption.
According to Vey-Sern Ling, a managing director at Union Bancaire Privee, the launch of Alibaba’s open-source reasoning model is a key catalyst for the company’s stock performance. Ling noted that Alibaba's core business is improving and will benefit from China's focus on boosting consumption, alongside the potential for AI to drive growth in Alibaba's cloud computing services.
China's Push for Technological Leadership
The announcement comes at a time of heightened optimism in the Chinese tech sector. At the National People’s Congress meeting this week, Chinese officials emphasized technological innovation and consumption as key priorities. Alibaba’s AI model aligns with China’s ambitions to lead in the development of next-generation technologies.
As the sector heats up, other companies are also rolling out AI models aimed at competing with DeepSeek and OpenAI’s offerings. Manus AI, for example, introduced a general AI agent claimed to outperform OpenAI’s DeepResearch in certain tasks. The competition is intensifying, with AI agents gaining widespread attention in the market.
Ambitious Investment Plans
Alibaba’s investment in AI infrastructure reflects its serious commitment to leading in the space. The company has pledged over 380 billion yuan ($52 billion) to build AI data centers over the next three years. This is one of China’s largest AI infrastructure budgets, signaling Alibaba's determination to maintain its leadership in the rapidly evolving field of artificial intelligence.
As Alibaba continues to expand its AI offerings, the company’s ability to meet growing demand and manage the costs of infrastructure investment will be key factors to watch. Investors remain keenly aware of the risks associated with high capital expenditures in an unpredictable market.
Reminder, Alibaba Group Holding Ltd. announced plans to invest over 380 billion yuan ($53 billion) in AI infrastructure, including data centers, over the next three years.
