BABA on the NYSE: BABA on A3MInvestments — TradingView

Alibaba has seen strong growth, driven by the huge success of its artificial intelligence assistant Qwen. Just one week after its public beta release, the app has been downloaded more than 10 million times, marking the fastest launch in the history of such a tool.

This success marks the company’s decisive entry into the consumer AI market and solidifies its position as a direct competitor to ChatGPT and other global leaders in generative AI.

Why is Qwen more than just a chatbot?

The company positions Qwen as a “smart portal for daily life.”

Unlike many Western subscription models, Alibaba focuses on a “freemium” model and deeply integrates artificial intelligence into its ecosystem. Plans include applying “agent-based artificial intelligence” capabilities to automate tasks such as ordering food, booking travel and shopping on platforms like Taobao.

The app is currently available in China, with an international version expected soon.

Huge investments and financial results

To support its ambitions, Alibaba is mobilizing significant resources. The previously announced three-year artificial intelligence investment plan of 380 billion yuan (approximately US$53 billion) is comparable in scale to that of American IT giants.

These investments have already paid off:

Revenue growth: In the first quarter of fiscal 2026, revenue from the cloud computing intelligence segment increased 26% year-on-year to 33.4 billion yuan, mainly due to strong demand for artificial intelligence-based computing power and cloud services.

AI products grow significantly: AI-based product revenue achieved triple-digit growth for the eighth consecutive quarter, demonstrating the aggressive adoption of the technology by Chinese companies.

The cloud computing business is under pressure due to the high cost of building artificial intelligence infrastructure, and improving profitability remains a key challenge.

Technological innovation facing constraints

In response to U.S. export restrictions, Alibaba is looking for innovative ways to improve efficiency. Aegaeon’s recently launched GPU cluster system significantly reduces reliance on Nvidia chips. During beta testing, the technology reduced the number of GPUs required to support dozens of AI models by 82%, from 1,192 to 213.

The achievement highlights the company’s ability to mitigate the impact of sanctions through software improvements.

Alibaba is one of the few platforms in the world that provides a full range of artificial intelligence services. Strategic investments in promising areas, such as international expansion and partnerships (such as the upcoming Xpeng robot taxi trial using Amap in 2026), form the basis for long-term growth.

The downside is that the stock’s current valuation is too optimistic, and maintaining accelerating growth will require significant ongoing investment and prudent strategic execution.

We see that we are in the fourth wave and the stock needs to take a break after strong momentum before it can continue to grow. Overall, we don’t expect the stock to pay a good dividend. A number of factors point to a correction in growth going forward.