Alibaba's Shares Experiencing Notable Uptick Today
Alibaba's shares soared on Wednesday, with a 1.9% gain by 1:50 p.m. ET, even as the broader market struggled. The S&P 500 and Nasdaq Composite dropped 0.6% and 0.9% respectively. The boost for Alibaba came after the company announced the latest version of its AI model, Qwen 2.5-Max.
The move by Alibaba comes on the heels of the market's reaction to DeepSeek, a Chinese artificial intelligence chatbot that shook the market, causing a sharp decline in U.S. AI stocks. DeepSeek's efficiency and cost-effectiveness, achieved despite using inferior chips due to U.S. export restrictions, have left U.S. AI companies playing catch-up.
In response to DeepSeak's V2 model, Alibaba slashed prices on its offerings by up to 97%. Now, Alibaba claims that its Qwen 2.5-Max is more powerful than DeepSeek's V3. However, it's worth noting that this is not the latest version of DeepSeek, which is DeepSeek-R1. Despite the gap, Alibaba's stock saw an uptick.
DeepSeek and its latest model, DeepSeek-R1, have garnered attention for its advanced reasoning capabilities, particularly in mathematical reasoning, and its use of pure reinforcement learning. It's been able to compete with top models in complex problem-solving, causing a ripple effect in the market and raising concerns about OpenAI's dominance.
Alibaba's Qwen 2.5, on the other hand, is an open-source AI model offering low-cost alternatives to existing AI models. It's been designed with multimodal capabilities, including superior text-to-image and image-to-text interpretation. Qwen 2.5 has demonstrated remarkable performance improvements over open-source and proprietary LLMs, particularly in mathematical reasoning and nuanced conversations.
The release of Qwen 2.5-Max has added to the competition in the AI sector, with Alibaba offering a low-cost alternative to DeepSeak. This has put pressure on domestic and overseas rivals, affecting the 'AI trade' and potential risks of a US-China trade war.
In terms of reasoning ability, DeepSeak-R1 excels in mathematical reasoning but falls slightly behind in contextual inference. Qwen 2.5, however, performs better in both mathematical reasoning and logical inference. In terms of multimodal capabilities, Qwen 2.5 takes the lead with its superior text-to-image understanding. Both models excel in code generation, but Qwen 2.5 has an edge in generating functional and structured code snippets.
In summary, the competition between DeepSeak and Qwen 2.5 shapes the AI landscape. While DeepSeak focuses on advanced reasoning and cost-effectiveness, Qwen 2.5 offers strong multimodal capabilities and low-cost training. The market impact is significant, with both models disrupting traditional AI market dynamics and influencing the competitive landscape of AI stocks.
Alibaba's successful launch of Qwen 2.5-Max has attracted investors' interest in the company's finance sector, as they see potential for high returns from investing in its AI technology. The price reduction of Alibaba's offerings, in comparison to DeepSeek, has also made its AI model an attractive option for businesses looking to save money on AI solutions.
