Alibaba's AI Advancements Boost Stock Amid DeepSeek Competition

Why Alibaba Stock Gained 16.6% Last Month | The Motley Fool

Shares of Alibaba Group (BABA 0.81%) rose 16.6% in January 2025, according to data from S&P Global Market Intelligence. The China-based e-commerce and cloud computing giant soared on the same news that drove Nvidia (NVDA 1.83%) shares nearly 11% lower last month: the introduction of a new artificial intelligence (AI) system called DeepSeek. Alibaba is not the company behind DeepSeek. The innovative large language model (LLM) is run by a software company by the same name, privately owned by a Chinese hedge fund named High-Flyer. That being said, Alibaba manages an LLM of its own, called Qwen. The company was quick to introduce DeepSeek services on its cloud platform, giving clients the option to train their own DeepSeek-based LLMs with proprietary data feeds. It also released a new version of Qwen, Quen2.5, immediately after DeepSeek made a splash. The upgrade was unexpected because it fell on the first day of Lunar New Year -- an important holiday on the Chinese calendar. So Alibaba is doing more than simply riding the coattails of a new challenger in the LLM industry. The company is actively employing and reselling DeepSeek technology on its own platform, while also fighting back with a better version of its in-house AI solutions. None of this is game-changing for Alibaba. However, it's good to see the Chinese giant staying light on its proverbial feet, ready to respond to new challenges at the drop of a hat. That's how you keep your business viable in the long run. That's good news for longtime Alibaba holders like yours truly. I expect to find out more about the company's DeepSeek response and general AI strategy in next week's fourth-quarter earnings report. If nothing else, analysts should poke and prod Alibaba's management for these important details on the earnings call. Until then, Alibaba remains a low-priced, fast-growing giant in several promising fields of business. The stock has struggled in recent years, arguably setting new investors up for great long-term returns. Today, it trades at the modest valuation of 20.6 times earnings and 15.8 times free cash flows. These ratios are very affordable next to AI-based market darlings like Nvidia or cloud-plus-retail giants such as Amazon and MercadoLibre. Whatever comes next for Alibaba, one thing is for sure: Its fortunes should rise or fall depending on how effective the AI strategy turns out to be.

How Alibaba stock drived 5.5% boost from DeepSeek competition

Shares of Alibaba Group Holding (BABA) surged 1.9% on Wednesday, with gains reaching as high as 5.5% earlier in the day, amid a downturn in the S&P 500 and Nasdaq Composite. The rise follows Alibaba's announcement of the latest version of its Qwen AI model just days after the market reacted negatively to the release of China's DeepSeek AI chatbot. The launch of DeepSeek impacted U.S. AI stocks, which saw declines following the news. DeepSeek was reported to have been developed at significantly lower costs compared to its U.S. counterparts, utilizing less advanced chips due to U.S. export restrictions. This raised concerns among investors about the efficiency and cost-effectiveness of American AI ventures. In response, Alibaba introduced Qwen 2.5-Max, claiming it outperforms many current AI models, including DeepSeek's V3 version. However, it is important to note that Alibaba's claims about Qwen 2.5-Max being superior pertain specifically to the DeepSeek-V3 model, not to its latest R1 model, which has gained significant attention. Despite these claims, DeepSeek appears to maintain a competitive edge. Furthermore, Alibaba's decision to cut prices up to 97% on its offerings after DeepSeek's V2 model demonstrates the competitive pressures in the Chinese AI market. Despite being a relatively small and privately-held company without state backing, DeepSeek's approach has disrupted the industry. If Alibaba's Qwen 2.5-Max gains traction as a superior AI model, the company could capture significant market share in China's competitive AI landscape. Should Alibaba's aggressive price cuts of up to 97% force competitors to follow suit, this strategy could strengthen its position as a cost-effective leader in AI solutions. Investors who believe Alibaba can leverage its extensive ecosystem to scale Qwen rapidly might see long-term growth as the Chinese AI market expands. If you're uncertain about Qwen 2.5-Max's actual performance against competitors like DeepSeek's R1, holding your position might be wise. While Alibaba's shares rose 1.9% amid a broader market downturn, it's still unclear if the AI advancements will translate into sustained revenue growth. Investors who think the competitive pressures in the Chinese AI market could lead to prolonged price wars might prefer to hold and watch how the market dynamics evolve before making further moves. If DeepSeek continues to outperform with its cost-efficient models, Alibaba could struggle to maintain its edge despite the Qwen launch. Those worried that Alibaba's price cuts reflect deeper competitive vulnerabilities may consider selling, especially if they believe DeepSeek's low-cost strategy could undermine Alibaba's market share. Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

Alibaba Said Its AI "Outperformed DeepSeek": This Is Why The Stock Is A Buy (NYSE:BABA)

Risks include U.S.-China tariff wars and regulatory challenges in China, but AI integration could drive long-term revenue growth, making BABA a compelling buy-and-hold opportunity. Introduction DeepSeek (DEEPSEEK) shook the market last week after making claims its AI model cost a fraction of what leading players in the industry spent on training. Several tech stocks tumbled after the news. Microsoft I am a financial analyst and private investor with a primary focus on high-growth stocks. My portfolio is mainly made up of small caps, but there are also a few blue-chip picks. When I am not investing or writing about investments, I probably have a good time with my family. NB: Investment opinions are just opinions. I am not a registered financial advisor. Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Alibaba Stock Rises As DeepSeek Selloff Continues, Qwen AI Model Gains Attention - Alibaba Gr Hldgs (NYSE:BABA)

As DeepSeek-linked stocks decline over sustainability concerns, Alibaba's strong AI push helps BABA shares outperform other chinese stocks. Alibaba Group BABA shares are trading higher on Thursday as the company's latest artificial intelligence model, Qwen 2.5, gained traction. What To Know: DeepSeek, which had positioned itself as a competitor to OpenAI, saw its momentum weaken this week, with investors questioning whether its aggressive cost-cutting strategy and rapid development cycle were sustainable. The selloff has led traders to reassess the broader AI landscape, with Alibaba emerging as a beneficiary after unveiling Qwen 2.5-Max, an AI model the company claims has outperformed DeepSeek-V3 in multiple benchmarks. Qwen 2.5 is Alibaba's latest iteration in its AI development efforts, built as a mixture of expert (MoE) models designed to enhance efficiency and performance. The Qwen 2.5-Max variant has been benchmarked against top-tier models, outperforming DeepSeek V3 in tests such as Arena Hard, LiveBench, LiveCodeBench and GPQA-Diamond. Alibaba has also made adjustments to its API pricing, with input tokens priced at $1.6 per million and output tokens at $6.4 per million, aiming to attract broader adoption. The timing of Alibaba's AI release, coinciding with the Lunar New Year holiday, underscored the pressure on Chinese tech firms to keep up with AI advancements. Qwen 2.5's improved pricing structure and reported performance advantages may have drawn attention, helping BABA shares defy broader weakness in Chinese equities. BABA Price Action: Alibaba shares were up 6.43% at $102.94 at the time of writing, according to Benzinga Pro. Read Next: Apple Surprises Users With Starlink Beta, Teams Up With Elon Musk's SpaceX And T-Mobile To Bring Satellite Texting For iPhone Users In iOS 18.3 Image via Shutterstock. BABAAlibaba Group Holding Ltd$102.986.48%Overview Rating:Speculative50%Technicals Analysis660100Financials Analysis400100WatchlistOverviewMarket News and Data brought to you by Benzinga APIs