Prime Highlights:
Alibaba’s Hong Kong-listed shares rose 8.39%, reaching a 52-week high, following the announcement of its new AI model, QwQ-32B. U.S. shares also saw a 2.5% increase in premarket trading.
Analysts from Bernstein anticipate that AI developments, including Alibaba’s new model, could drive significant stock gains and accelerate revenue growth, particularly through its Cloud Intelligence Group.
Key Background:
Alibaba’s shares saw significant gains on Wednesday after the company unveiled its latest AI reasoning model, QwQ-32B, which it claims competes with the DeepSeek R1, a dominant global AI model. Alibaba’s Hong Kong-listed shares surged by 8.39%, reaching a new 52-week high, while its U.S. shares rose by approximately 2.5% in premarket trading. The company’s stock has now risen nearly 71% year-to-date in Hong Kong.
The QwQ-32B model operates with 32 billion parameters, a stark contrast to DeepSeek’s 671 billion parameters. Despite having fewer parameters, Alibaba asserts that the QwQ-32B delivers high efficiency, especially with its enhanced performance in tasks such as mathematics and coding. The model’s ability to provide powerful results with a lower volume of parameters is seen as a step towards more optimized and resource-efficient AI systems, which is an increasingly sought-after quality in the competitive AI space.
Alibaba’s announcement comes at a time when both established and emerging AI companies are striving to develop more efficient and powerful models. The launch of DeepSeek’s R1 earlier this year disrupted the market, prompting rivals like Alibaba to accelerate their AI innovations. Alibaba’s commitment to advancing its AI technology is evident in its investment in the Cloud Intelligence Group, which has played a significant role in the company’s recent profit growth. According to Alibaba CEO Eddie Wu, the company expects AI-driven revenue growth to continue accelerating in the future.
Analysts at Bernstein believe the optimism surrounding Alibaba’s AI developments could lead to further stock gains and boost the company’s earnings trajectory. As AI models evolve and become more efficient, experts predict increased demand and a wider range of applications, ultimately shaping the future of AI consumption. This surge in AI advancements is anticipated to bring about more opportunities for Alibaba, further positioning the company as a key player in the global AI landscape.
