Alibaba’s shares experienced a significant surge on Thursday, driven by the company’s decision to open-source its QwQ-32B artificial intelligence model. The e-commerce giant’s Hong Kong shares saw a jump of up to 7.5% following this announcement, illustrating continued investor confidence in the Chinese tech sector.
Alibaba’s QwQ-32B model is designed to compete with DeepSeek’s R1, the latest flagship model from the AI startup. According to Alibaba, its model offers comparable performance while providing superior energy and cost efficiency. The news further fueled what has been a positive year for Alibaba, with its shares in Hong Kong and its secondary listing in New York climbing approximately 70% year-to-date. The company’s current market capitalization stands at $317.7 billion, a figure considerably smaller than its US counterparts like Amazon, which has a market capitalization of $2.16 trillion.
This positive momentum for Alibaba’s stock follows other recent developments. Last month, shares rose after a report indicated the company was collaborating with Apple to integrate AI features for iPhones in China, a partnership the companies later confirmed. Additionally, the stock received a boost on news that Chinese leader Xi Jinping met with several of the country’s top tech executives.
This positive trend is part of a larger rally in Chinese tech stocks, with DeepSeek’s performance playing a key role. The sector is experiencing a resurgence following the end of Beijing’s extensive regulatory measures on the technology industry. Investors perceived a meeting between Xi Jinping and tech leaders, including Alibaba founder Jack Ma, Tencent CEO Pony Ma, and BYD CEO Wang Chuanfu, as a sign of the government’s desire to revitalize the sector.
Earlier last week, Alibaba unveiled plans to invest a minimum of 380 billion Chinese yuan, equivalent to $53 billion, in cloud computing and AI infrastructure over the next three years. The level of investment by major tech companies, as a component of their capital expenditure, is a significant talking point, particularly as many are substantially increasing their AI-related spending. “DeepSeek is driving Cloud capex in China,” according to a note from HSBC analyst Frank He. “We see that individual user demand has been growing, and the AI model has been increasingly deployed by enterprises and government entities.”
Analysts at Goldman Sachs, in a report last month, described DeepSeek R-1 as having “altered the narrative” surrounding Chinese tech. They also noted that the current rally appears more sustainable than previous surges, such as the stimulus-driven spike of September, which faded quickly, due to its “innovation-driven” nature.
On Thursday, Alibaba noted that its QwQ-32B model has one-fifth the number of parameters compared to DeepSeek-R1, which contributes to its high efficiency. The model is now available open-source on hosting platforms, including Hugging Face. The open-source nature of these models allows for unrestricted sharing of software, permitting any individual to utilize it for any purpose. DeepSeek’s initial release of its open-source AI model earlier in January created a significant ripple effect among US tech and AI companies. Third-party evaluations revealed that the model exceeded its peers from OpenAI, Meta, and other leading developers, while the development costs were reported to be lower. Business Insider’s request for comment from the company was not immediately returned.
