Alibaba Launches AI That Reads Emotions To Rival OpenAI, But Shares Falls On Hong Kong Exchange Despite Joe Tsai's $10 Trillion Market Outlook

Alibaba Group Holding Ltd. BABA BABAF has released a new artificial intelligence model that is capable of reading human emotions. The Chinese tech giant is escalating competition with OpenAI as it aggressively pushes into AI technologies following the DeepSeek AI saga in January.

What Happened: Despite the launch, Alibaba’s shares dropped 2.45% to 131.50 HKD ($16.92) on the Hong Kong Exchange.

The new open-source R1-Omni model, developed by Alibaba’s Tongyi Lab, can infer emotional states from video while describing people’s clothing and environment, reported Bloomberg.

Alibaba’s R1-Omni is available for free on Hugging Face, unlike OpenAI’s GPT-4.5, which costs $200 per month.

The release comes as Alibaba Chairman Joe Tsai projected the AI market could reach $10 trillion, stating that AI could “enhance the quality of work by taking care of tedious research-related tasks” across industries including finance and law. Tsai anticipates that Alibaba will gain considerable advantages from its cloud computing division.

Why It Matters: Alibaba has committed $53 billion toward cloud and AI infrastructure over the next three years. The company recently launched QwQ-32B, a reasoning model claiming performance comparable to DeepSeek’s R1 despite having fewer parameters.

Alibaba.com president Zhang Kuo aims for 100% AI tool adoption among the platform’s 200,000 merchants by the end of 2025, with over half currently using these tools weekly.

Analyst consensus gives Alibaba a price target of $138.26, with recent ratings from Benchmark, Bernstein, and Morgan Stanley averaging $178.33, suggesting a potential 32.39% upside.