Jamie Spencer
Alibaba shares surged after the Chinese tech giant unveiled a new AI reasoning model it claims can rival DeepSeek’s widely acclaimed R1.
Stock Performance and Market Reaction
Hong Kong-listed shares of Alibaba ended Thursday up 8.39%, reaching a new 52-week high, while its U.S.-listed stock slipped about 1%. Alibaba shares have gained nearly 71% year-to-date in Hong Kong, reflecting strong investor optimism.
Introducing QwQ-32B: Alibaba’s AI Breakthrough
Alibaba’s latest AI model, QwQ-32B, was introduced as a “cutting-edge reasoning model” capable of competing with DeepSeek-R1. Unlike DeepSeek’s massive 671 billion parameters, with 37 billion actively engaged during inference, Alibaba’s QwQ-32B operates with 32 billion parameters, optimizing efficiency while maintaining high performance.
Large language models (LLMs) like QwQ-32B rely on parameters to process and generate human language. A lower number of parameters can indicate a more efficient model, crucial in an AI landscape that prioritizes resource optimization.
Alibaba stated that QwQ-32B has already achieved “impressive results” and that the company will continue to refine its performance, particularly in math and coding tasks.
The Race for AI Innovation
AI development has accelerated globally, with companies striving to improve efficiency and computational power. DeepSeek’s groundbreaking R1 model, launched earlier this year, ignited a race among AI firms to push the boundaries of reasoning capabilities.
Alibaba has been actively investing in AI since launching its first model in 2023. The company’s Cloud Intelligence unit played a crucial role in driving its strong profit growth in the December quarter.
“Looking ahead, revenue growth at Cloud Intelligence Group driven by AI will continue to accelerate,” Alibaba CEO Eddie Wu stated.
Market Optimism and Analyst Outlook
Bernstein analysts suggest that Alibaba’s advancements in AI could lead to significant stock gains, positioning the company’s earnings on an “upward trajectory.”
Futurum Group CEO Dan Newman highlighted the rapid pace of AI innovation. “When DeepSeek came out, it made everyone question whether OpenAI was the final answer,” he told CNBC. “Would incumbents like Microsoft, Google, and Amazon, with their massive investments, dominate?”
Newman also emphasized that AI models are becoming increasingly “commoditized” as companies strive to reduce costs and expand access.
The Future of AI: Efficiency and Accessibility
Newman pointed out that AI development is shifting from a focus on training—where Nvidia has led—to inference, where AI is actively consumed. “Inference, the consumption of AI, is the future and will exponentially increase AI usage,” he said.
A New Era for Alibaba and AI
Alibaba’s introduction of QwQ-32B marks a significant step in AI development, strengthening its competitive position in the global market. As efficiency and accessibility continue to drive AI innovation, Alibaba’s cloud and AI investments could shape the company’s future growth trajectory.
