Alibaba Group is pursuing a two-track strategy to bolster its artificial intelligence capabilities, aiming to secure critical computing power while navigating geopolitical constraints. The Chinese tech giant is simultaneously advancing its proprietary semiconductor technology and seeking access to leading-edge chips from international suppliers like Nvidia.
Securing External Supply: The Nvidia H200 Pursuit
Despite significant in-house developments, Alibaba continues to prioritize acquiring top-tier international hardware. Recent reports from late January indicate that Chinese authorities have granted conditional approval for Alibaba and other major domestic tech firms to purchase Nvidia’s H200 AI chips.
This “conditional” status means the authorization reportedly remains subject to final stipulations. This aspect of the strategy is clear: internally developed solutions act as a risk buffer, but when access to the most powerful chips becomes available, Alibaba intends to leverage it to avoid falling behind in raw computational performance.
The Internal Engine: Deployment of the Zhenwu 810E Processor
Complementing its external efforts, Alibaba’s semiconductor unit, T-Head, officially unveiled its newest self-developed AI processor, the Zhenwu 810E, on Friday. This chip is designed for both training and inference, covering the full lifecycle from educating large AI models to deploying them in live operations.
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Key technical specifications released by the company include 96 GB of HBM2e memory and an interconnect bandwidth of 700 GB per second. More crucially, the processor has moved beyond the design phase and is already being utilized within Alibaba Cloud’s computing clusters. According to corporate statements, it currently serves over 400 customers. Furthermore, the Zhenwu 810E is optimized for Alibaba’s proprietary Qwen large language models. This integration creates a synergistic loop of model, cloud infrastructure, and hardware, intended to reduce reliance on external suppliers.
Investor Considerations: Weighing Cost Against Potential
These chip developments arrive at a time when investors are carefully balancing Alibaba’s long-term AI potential against its near-term financial outlays. Constructing AI infrastructure demands substantial capital investment, which typically pressures profit margins. Concurrently, intense competition within China’s technology sector necessitates continued spending in areas like marketing and broader infrastructure investment.
The current share price reflects a market that is deliberating rather than reacting with unbridled optimism. On Friday, the stock closed at 144.80 Euros.
Moving forward, market observers will likely focus on two primary indicators: the real-world adoption rate of the Zhenwu 810E across Alibaba Cloud’s daily operations and the finalization of terms for procuring Nvidia’s H200 chips. The success of Alibaba’s dual-hardware strategy in meaningfully advancing its cloud and AI divisions will hinge on progress in these two areas.
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