Alibaba is undergoing a significant strategic realignment, placing artificial intelligence at the very core of its technological future. The Chinese tech giant’s revamped approach centers on two parallel tracks: securing advanced computing hardware and deeply embedding its proprietary AI model, Qwen, across its service ecosystem. The critical question for investors is whether the company can translate these foundational investments into tangible revenue growth with sufficient speed.
Software Integration: Weaving AI into Everyday Services
A central pillar of Alibaba’s strategy involves expanding its software ecosystem through AI. A key initiative is the integration of its mapping and navigation service, Amap, with the company’s own large-language model, Qwen AI. This move is designed to bolster what Alibaba terms “Life Services.” The goal is to enable users to handle daily tasks—such as finding directions, searching for local businesses, or making bookings—directly through AI-powered assistants.
This deeper integration aims to increase user engagement within Alibaba’s own digital environment, creating fresh avenues for monetization in the competitive local services market. The direction aligns with CEO Eddie Wu’s vision of steering the company toward AI-driven expansion. Mirroring approaches seen at other global technology firms, Alibaba is working to position its AI not merely as a standalone product but as an underlying infrastructure that enhances its existing suite of applications.
Securing the Hardware: A Major AMD Chip Order in the Works
On the hardware front, recent reports indicate Alibaba is preparing a substantial purchase of AI accelerators from Advanced Micro Devices (AMD). The company is reportedly in negotiations to acquire approximately 40,000 to 50,000 MI308 accelerators—specialized high-performance chips designed for AI workloads.
This planned procurement serves a dual purpose: substantially strengthening the hardware foundation of its cloud computing business while simultaneously reducing dependency on any single supplier. In a global environment where AI chips are scarce and in high demand, diversifying supply sources is a strategic move to mitigate potential bottlenecks and ensure capacity for expansion.
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Market Context and Valuation Gap
Alibaba’s push comes as the entire Chinese technology sector is being propelled by the AI narrative. Rivals including Baidu and Tencent are also making heavy investments in generative AI and data center capabilities. By seeking to secure the MI308 chips, Alibaba is positioning itself more directly in the intensifying race for computational power and advanced models.
Current market valuation suggests analysts see potential that hasn’t yet been fully priced into the stock. The consensus price target among analysts cited is $194 USD, standing notably above the recent trading level. Recent trading activity has shown above-average options volume, signaling heightened investor interest in the stock’s near-term trajectory.
Technically, the shares have faced recent pressure. With a Relative Strength Index (RSI) reading of 29.4, the stock is in oversold territory, and its price sits roughly 7% below the 50-day moving average. However, this near-term weakness is contextualized by a strong year-to-date performance, with the stock still up well over 50% since the start of the year. The equity closed yesterday at 127.80 Euros, a level that remains clearly above its annual low, though significantly below its 52-week high—a picture reflecting the market’s current blend of caution and optimism.
The Path Forward: Awaiting Concrete Confirmation
The coming weeks are likely to hinge on hard confirmations and execution metrics. A formal announcement from either Alibaba or AMD detailing the exact size of the chip order would serve as a clear catalyst, as the scale of investment will heavily influence the speed at which Alibaba can expand its cloud infrastructure capabilities.
Investor focus will also be on how swiftly the newly acquired hardware can be deployed to power productive AI services. Furthermore, usage metrics for Qwen AI and its integration with Amap will be closely watched. As the first quarter of 2026 approaches, the growth trajectory of Alibaba’s cloud revenue will move into the spotlight. Concrete corporate disclosures regarding chip imports, AI rollout milestones, and the execution of its “AI-driven” strategy will be crucial for assessing whether the current discount to analyst price targets is justified.
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