Alibaba Leverages Scale and Deep Pockets to Slash AI LLM Prices To Gain Market Share

Alibaba Group Holding BABA slashed its large language model prices by up to 85%, exhibiting intense domestic rivalry in the AI space.

Chinese companies remain engaged in a price war to win market share, prompting Alibaba Cloud to initiate discounts on its visual language model, Qwen-VL, CNBC cites from Alibaba’s WeChat post on Tuesday.

In February, the Chinese e-commerce juggernaut announced up to 55% discounts on its core cloud products.

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Jack Ma’s co-founded company slashed its Qwen AI model prices by up to 97% in May. Qwen-VL can interpret both texts and images.

Chinese tech firms, including Alibaba, Tencent Holdings TCEHY, Baidu Inc BIDU, and JD.com Inc JD, launched their large language models.

In the third quarter, Chinese companies spent 500 million yuan ($70.2 million) on promotional campaigns for AI applications. Alibaba committed 200 million yuan to promote the Quark cloud storage and search platform.

Alibaba remains focused on LLM efforts in the enterprise segment rather than launching a consumer AI chatbot like OpenAI’s ChatGPT. Alibaba Cloud Intelligence Group revenue grew by 7% to $4.22 billion in the second quarter.

Alibaba, Tencent, and Baidu disbursed $7 billion on AI infrastructure and processors in the first half of 2024.

Meanwhile, Wedbush’s Dan Ives expects the U.S. Big Techs, including Meta Platforms Inc META, Microsoft Corp MSFT, and Amazon.Com Inc AMZN, to spend $1 trillion on AI capital expenditure.

Alibaba Group Holding stock surged over 13% in the last 12 months. Investors can gain exposure to the stock through Invesco Golden Dragon China ETF PGJ and First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT.

Price Action: BABA stock traded lower by 1.04% at $83.91 premarket at the last check on Thursday.

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