Alibaba’s 8% Surge on Renewed Optimism in China’s Tech Sector

Key Takeaways

• Alibaba’s share price climbed 8% on Thursday.
• The stock surge followed the release of a new Qwen model that competes with DeepSeek R1.
• Optimism surrounding China’s AI scene has significantly boosted the country’s tech companies.

The release of Alibaba’s latest Qwen AI model drove the company’s share price to jump 8% on Thursday, March 6.

The 32 billion parameter reasoning model, QwQ-32B , is positioned as a competitor to DeepSeek R1 and reflects China’s emerging dominance in the open-source, small to midsized model market.

Alibaba’s Answer to DeepSeek R1

While AI developers once boasted about their models’ performance compared to OpenAI models, Alibaba highlights how it performs against DeepSeek R1.

The new Qwen model beats DeepSeek’s 32 billion parameter model on all relevant benchmarks and is on par with the full-sized R1-671B.

The team behind QwQ-32B attributed its improved performance to reinforcement learning techniques similar to those used by DeepSeek to develop the R1 model.

R1 itself is based on an older Qwen model, and the productive exchanges between the two companies showcase the value of open-source research and development.

Besides the launch of QwQ-32B, broader political and economic factors have also lifted Chinese stocks across the board.

During the government’s annual “two sessions,” policymakers in Beijing signaled their intention to ramp up consumption and unlock additional fiscal stimulus.

China’s Big Tech Rally Continues

Alibaba’s latest price jump builds on a bullish run for Chinese Big Tech firms.

Alibaba stock has risen over 40% in the past month, while Tencent stock has climbed nearly 30% in the same period.

Even Baidu, which has failed to generate the same AI buzz as its peers, has gained around 10% since the start of the year.

In contrast, the U.S.’s biggest tech stocks—Apple, Nvidia, Microsoft, Amazon and Google—all traded below their prices on Jan. 1.

As Joshua Mahony, Chief Market Analyst at Scope Group, shared, “With BABA up 42% over the past month, the 8% decline for Nvidia over that period highlights where the action is for tech traders right now.”

AI Adoption Boosts Chinese Firms

While still significantly behind the U.S. in terms of investment, China’s AI boom has catalyzed surging adoption across the country.

Some of the country’s largest corporations were among the first to embrace DeepSeek R1.

That and an emerging roster of AI startups, like Zhipu, have fueled an influx of foreign investment, with major global funds directing capital to the Chinese market despite ongoing tariff concerns.

Meanwhile, companies’ spending on AI has gone from strength to strength.

For its part, Alibaba has pledged to invest at least 380 billion yuan ($52.4 billion) in new cloud and AI infrastructure, the firm’s single largest spending commitment ever.