Shares of Chinese tech giant Alibaba surged after the behemoth revealed a new reasoning model it claims can rival DeepSeek’s global blockbuster R1.
The Hong Kong-listed shares of Alibaba ended Thursday session up 8.93% which is a new 52-week high with the company’s New York trading stock slipping about 1%. In Hong Kong, Alibaba shares have gained nearly 71% on a year-to-date basis.
Alibaba says its model competes with DeepSeek
Alibaba unveiled QwQ-32B, its latest AI reasoning model, which it said, “Rivals cutting-edge reasoning model, e.g., DeepSeek-R1.”
The QwQ-32B operates with 32 billion parameters compared to DeepSeek’s 671 billion parameters with 37 billion parameters actively engaged during inference, the process of running live data through a trained AI model in order to generate a prediction or tackle a task.
Because of its fewer parameters, the implication is that it is smaller and more efficient to train the model.
Alibaba’s new AI model release comes a day after the launch of a general AI agent called Marnus by another company. According to the Marnus dedicated website, the software can carry out complex, multi-step tasks such as screening resumes and creating a website.
Reports say Marnus was developed by a company called Monica of Chinese origin.
The AI agent is touted as more advanced than a chatbot because it does not only generate ideas but delivers tangible results. The more-than-chatbot can produce a report recommending properties to buy based on specific criteria.
The QwQ-32B was released by Alibaba in an online statement as delivering, “exceptional performance”, and according to the tech giant, the version almost entirely surpasses OpenAI-o1-mini and rivals the strongest open source reasoning model, DeepSeek-R1.
AI firms compete for supremacy
OpenAI the American tech giant says the OpenAI-o1-mini is the company’s cost-efficient reasoning model released last year.
The tech giant said the model has achieved a qualitative leap in mathematics coding and general capabilities with overall performance equal to DeepSeek R1
In January, the Chinese startup stunned the world with its high-performing reasoning model R1. The developer said it cost far less to train than established Western rivals.
Investor confidence in Chinese companies’ ability to innovate has since grown at a time when the US-China tech rivalry is increasing. Since the breakout of DeepSeek in January, the Hang Seng China Enterprises Index has gained over 30%.
Now, Alibaba, the tech company that owns e-commerce platforms Taobao and Tmall, launched its first ChatGPT equivalent in 2023 after OpenAI launched its industry-defining AI reasoning model and named it Tongyi Qianwen.
Alibaba, in January also released Qwen 2.5 Max, another model that it said was better than DeepSeek’s highly acclaimed V3 model, released in February 2025.
Alibaba pledges billions of dollars for AI development
The tech giant said it will invest more than $52.4 billion in its AI and cloud computing infrastructure over the next three years. The pledged amount exceeded what Alibaba had invested in those areas over the past ten years.
This week, leaders in China pledged support for emerging industries of the future including increasing funding for AI, humanoid robots, and quantum technology.
Technology companies in China have been increasing investment in the AI industry with Alibaba investing in AI after debuting its first model in 2023. The company’s strong cloud intelligence unit was a key contributor to Alibaba’s sharp profit hike in the December quarter.
Alibaba CEO Eddie Wu said, “Looking ahead, revenue growth at Cloud Intelligence Group driven by AI will continue to accelerate.”
Bernstein analysts opined that the optimism surrounding AI developments could lead to large gains for Alibaba stock and set its earnings on a “more upwardly pointing trajectory.”
Futurum Group CEO Dan Newman told CNBC’s Squawk Box Europe that, “The pace of innovation is incredibly fast right now and it is really good for the world to see it happening.”
“When DeepSeek came out, it made everyone sort of question, was OpenAI the final answer? Would the incumbents, the Microsofts, the Googles, or the Amazons that have all made massive investments win?” quizzed Newman.
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