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Alibaba shares surged 7% after the company open-sourced its QwQ-32B AI model.
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The model competes with DeepSeek's R1, and the company says it is more energy- and cost-efficient.
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Alibaba's shares have risen close to 70% this year amid a Chinese tech stock rally.
Alibaba surged on Thursday after the company made one of its artificial intelligence models public, a sign that the party isn't over for Chinese tech stocks.
The e-commerce giant's Hong Kong shares jumped as much as 7.5% in Hong Kong after it made its QwQ-32B model public. Alibaba said that the model competes with DeepSeek's R1 — the AI startup's newest flagship model — in terms of performance while being more energy- and cost-efficient.
Alibaba's shares in Hong Kong and its secondary listing in New York are up close to 70% so far this year. The company is worth $317.7 billion, much smaller than its US counterparts like Amazon, which has a market capitalization of $2.16 trillion.
Last month, Alibaba's shares rose after a report said the company was working with Apple to roll out AI features for iPhones in China, news the companies later confirmed. The stock also jumped on news that Chinese leader Xi Jinping was meeting with the country's tech moguls.
The share performance is part of a DeepSeek-propelled stock rally for Chinese tech firms, which are making a comeback after Beijing's yearslong crackdown on Big Tech. Investors saw Xi's meeting with tech leaders, including Alibaba founder Jack Ma, Tencent CEO Pony Ma, and electric vehicle maker BYD CEO Wang Chuanfu, as a sign he wants to revive the sector.
Early last week, Alibaba announced plans to invest at least 380 billion Chinese yuan, or $53 billion, in cloud computing and AI infrastructure over the next three years. How much Big Tech companies are spending — part of their capital expenditure — is a hot topic, as some companies double down on AI-related investments.
"DeepSeek is driving Cloud capex in China," HSBC analyst Frank He wrote in a note last week. "We see that individual user demand has been growing, and the AI model has been increasingly deployed by enterprises and government entities."
Last month, Goldman Sachs analysts said that DeepSeek R-1 has "altered the narrative" of China tech. They added that the recent rally appears to be more sustainable compared to a September stimulus-driven spike that fizzled out in weeks because it is "innovation-driven."
On Thursday, Alibaba said its QwQ-32B model has one-fifth of the parameters compared to DeepSeek-R1, which means it is highly efficient. The model is now open-source on platforms including Hugging Face. Open-source models allow for the free and open sharing of software to anyone for any purpose.