Alibaba Launches New AI Model Qwen3.5 with Enhanced Capabilities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy BABA?
Source: seekingalpha
- AI Model Launch: Alibaba unveiled its new AI model Qwen3.5 on Monday, which excels in executing complex tasks and demonstrates performance on par with leading models, marking a significant advancement for the company in the AI sector.
- Cost Efficiency Improvement: Qwen3.5 achieves a 60% reduction in deployment costs while matching the performance of the Qwen3-Max model, which exceeds one trillion parameters, showcasing its substantial advantage in cost-effectiveness.
- Multimodal Capabilities: The new model supports not only text processing but also image and video handling, boasting strong language understanding, reasoning, and code generation capabilities, further solidifying Alibaba's competitive position in the AI market.
- Market Competition Pressure: Despite the impressive performance of Qwen3.5, Alibaba faces intense competition from companies like ByteDance, Baidu, and DeepSeek, which are also launching new AI models to capture market share.
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Analyst Views on BABA
Wall Street analysts forecast BABA stock price to rise
15 Analyst Rating
15 Buy
0 Hold
0 Sell
Strong Buy
Current: 158.730
Low
180.00
Averages
203.09
High
230.00
Current: 158.730
Low
180.00
Averages
203.09
High
230.00
About BABA
Alibaba Group Holding Ltd is an investment holding company mainly engaged in the provision of technology infrastructure and marketing platforms. The Company operates its business through nine segments. The China Commerce Retail segment is engaged in the China commerce retail business. The China Commerce Wholesale segment is mainly engaged in the operation of 1688.com. The Cloud Intelligence segment provides cloud services. The International Commerce Retail segment provides customer management services, sales of goods and logistics services. The International Commerce Wholesale segment is mainly engaged in the operation of Alibaba.com. The Cainiao Represents Logistics Services segment provides fulfilment services. The Local Services segment’s revenue includes platform commissions, logistics services revenue. The Digital Media and Entertainment segment engages in the operation of Youku and Alibaba. The All Others segment is mainly engaged in the Sun Art, Freshippo and other business.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Alibaba Launches New AI Model Qwen3.5 with Enhanced Capabilities
- AI Model Launch: Alibaba unveiled its new AI model Qwen3.5 on Monday, which excels in executing complex tasks and demonstrates performance on par with leading models, marking a significant advancement for the company in the AI sector.
- Cost Efficiency Improvement: Qwen3.5 achieves a 60% reduction in deployment costs while matching the performance of the Qwen3-Max model, which exceeds one trillion parameters, showcasing its substantial advantage in cost-effectiveness.
- Multimodal Capabilities: The new model supports not only text processing but also image and video handling, boasting strong language understanding, reasoning, and code generation capabilities, further solidifying Alibaba's competitive position in the AI market.
- Market Competition Pressure: Despite the impressive performance of Qwen3.5, Alibaba faces intense competition from companies like ByteDance, Baidu, and DeepSeek, which are also launching new AI models to capture market share.
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- Government Spending Stimulus: The Chinese government has allocated approximately 2.05 billion yuan for 'New Year gift packages,' including consumption vouchers and cash red envelopes, which will directly stimulate household consumption and drive growth in sectors like dining, shopping, and tourism.
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- Tencent's Challenges: Despite Tencent delivering solid AI ROI through its ads and gaming businesses, its chatbot development has faced scrutiny; Bernstein believes that Tencent's shares still offer a positive risk-reward profile as earnings compound and more AI-enabled services are introduced.
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- Warning Against Cutthroat Competition: The regulator urged companies to eliminate 'involution-style competition,' which refers to cutthroat rivalry, and called for collaboration to maintain a healthy market environment, promoting sustainable development and industry stability.
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- AI Model Launch: Alibaba unveiled its new AI model Qwen3.5 on Monday, which excels in executing complex tasks and demonstrates performance on par with leading models, marking a significant advancement for the company in the AI sector.
- Cost Efficiency Improvement: Qwen3.5 achieves a 60% reduction in deployment costs while matching the performance of the Qwen3-Max model, which exceeds one trillion parameters, showcasing its substantial advantage in cost-effectiveness.
- Multimodal Capabilities: The new model supports not only text processing but also image and video handling, boasting strong language understanding, reasoning, and code generation capabilities, further solidifying Alibaba's competitive position in the AI market.
- Market Competition Pressure: Despite the impressive performance of Qwen3.5, Alibaba faces intense competition from companies like ByteDance, Baidu, and DeepSeek, which are also launching new AI models to capture market share.
See More
2026 Chinese New Year Expected to Boost Consumer Spending
- Travel Volume Surge: The 2026 Chinese New Year holiday is expected to last nine days, with passenger traffic projected to increase by over 5% year-on-year, which will invigorate the tourism sector and related consumer spending in China.
- Government Spending Stimulus: The Chinese government has allocated approximately 2.05 billion yuan for 'New Year gift packages,' including consumption vouchers and cash red envelopes, which will directly stimulate household consumption and drive growth in sectors like dining, shopping, and tourism.
- Macau Casino Benefits: Macau casino operators such as Wynn Resorts and Las Vegas Sands are expected to benefit from increased holiday visitation and gaming revenue, with analysts forecasting strong performance for the 2026 CNY period, positively impacting quarterly earnings.
- Online Travel Agency Opportunities: Online travel agency Trip.com Group is anticipated to benefit from robust travel trends during the holiday, as improved booking patterns and a shift towards premium travel options support a positive outlook for overall travel spending.
See More
AI Progress Drives Performance in China's Internet Sector
- AI-Driven Performance: Analyst Robin Zhu from Bernstein noted that while the China Internet sector has had a lackluster start to 2026, AI advancements remain a key driver of relative performance, particularly with Alibaba's Qwen introducing agentic services that support the company's outperformance.
- Tencent's Challenges: Despite Tencent delivering solid AI ROI through its ads and gaming businesses, its chatbot development has faced scrutiny; Bernstein believes that Tencent's shares still offer a positive risk-reward profile as earnings compound and more AI-enabled services are introduced.
- Red Packet Incentives: Bernstein highlighted that leading platforms are using red packet promotions to stimulate user adoption, although this method is seen as a roundabout way to drive search behavior, leading investors to seek clearer evidence of AI's impact.
- Regulatory Environment Impact: Zhu pointed out that while Alibaba's AI optionality remains significant following the Qwen3-Max-Thinking launch, the complex regulatory backdrop and recent investigations may weigh on market sentiment, although recent pullbacks could improve the risk-reward profile.
See More
China's Gen Z Embraces Counterfeits, Leaving Luxury Brands Disappointed in Their Investment.
- Changing Consumer Landscape: The traditional Chinese luxury consumer, known for their brand obsession, is fading away.
- Emergence of a New Generation: A new group of savvy shoppers is rising, valuing shopping intelligence and experience over mere brand loyalty.
See More
China's Regulator Summons Internet Giants for Compliance
- Regulatory Compliance Demand: China's State Administration for Market Regulation summoned leading internet platforms like Alibaba, Baidu, and JD.com, mandating strict adherence to anti-unfair competition laws, e-commerce laws, consumer rights protection laws, and pricing laws to ensure fair market competition.
- Warning Against Cutthroat Competition: The regulator urged companies to eliminate 'involution-style competition,' which refers to cutthroat rivalry, and called for collaboration to maintain a healthy market environment, promoting sustainable development and industry stability.
- Participating Companies: Other firms such as ByteDance's Douyin, Tencent, Meituan, and Taobao also took part in the discussions, highlighting the regulator's focus on the entire industry and the importance of compliance.
- Impact on Market Environment: This regulatory action may have profound implications for internet companies' operational models, prompting them to prioritize compliance and cooperation in their competitive strategies, thereby influencing the future market landscape.
See More
China's Tech Giants Unveil New AI Models
- Alibaba's RynnBrain: Alibaba's newly launched RynnBrain model is designed for 'physical AI', enabling robots to understand their environment and identify objects, showcasing its competitive edge in robotics against Nvidia and Google.
- ByteDance's Seedance 2.0: The Seedance 2.0 model can generate realistic videos from user text prompts, demonstrating significant advancements in controllability, speed, and production efficiency, although it faces challenges due to issues with voice generation.
- Kuaishou's Kling 3.0: Kuaishou's Kling 3.0 video generation model features major upgrades in consistency and photorealistic output, with video durations of up to 15 seconds and native audio generation, likely boosting user growth and market share.
- Other AI Model Releases: Zhipu AI and MiniMax launched the GLM-5 and M2.5 models with enhanced coding capabilities, respectively, leading to a significant stock price increase for MiniMax, reflecting strong market interest in new technologies.
See More
