The timely announcement comes after Chinese AI start-up DeepSeek rattled the markets on Monday and prompted a tech-led selloff in the US and Europe after the company claimed its AI is more cost-effective and performs better than leading US models.
Alibaba now claims its new AI model, Qwen 2.5-Max, an open-source, is even more impressive than that of DeepSeek, putting pressure on its domestic and overseas rivals.
The e-commerce giant said Qwen 2.5-Max is also able to outperform OpenAI's GPT-4 and Meta's (META) Llama-3.1-405B.
Alibaba's share price was up 1.2% at the time of writing with its stock up 25% in six months. Investors will be keeping an eye on how the AI dominance quest plays out as the competition heats up between the tech titans.
Risk for a renewed US-China trade war
As reported by Euronews Business on Tuesday, following DeepSeek's update, US President Donald Trump said the breakthrough was "a wake-up call" for American tech companies and the need for the US "to be laser-focused on competing". He also expressed confidence that the US tech companies would maintain dominance in the AI industry.
Meanwhile, Trump's return has reignited concerns about a US-China trade war No 2. "For now, it can confidently be said that today has sparked a re-think of the 'AI trade' and risks of a US-China trade war," Kyle Rodd, a senior market analyst at Compital.com, wrote in a note to clients.
So far, President Trump has not imposed the 60% tariff on Chinese imports he pledged during his campaign. Instead, his administration has initiated an assessment, with findings expected by 1 April.
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