ii view: Alibaba unveils new high-performance AI computer chip

New AI chip and data centre expansion plans

Chief Executive Eddie Wu said:

“The demand for Thinking will no longer scale with population, but with the depth of Machine Intelligence.

“Today, the total volume of Machine Thinking is less than 3% of all Human Thinking. If that volume eventually scales to 1,000x human capacity, the simple math tells us: Machine Thinking still has an enormous growth runway.”

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ii round-up:

Alibaba Group Holding Ltd ADR (NYSE:BABA) unveiled a new high-performance AI computer chip which the retailer and data centre provider plans to use across an expansion of its existing data centre capacity.

Describing the new Zhenwu V900 as China’s most powerful chip, it triples the performance of Alibaba’s predecessor in a move aimed at competing with global AI chip leader NVIDIA Corp (NASDAQ:NVDA). Data centre capacity is to expand to more than 20 GigaWatts by 2032, a 10 times increase from its position in 2022 as Alibaba looks to capture the expected huge growth in AI and machine thinking.  

Shares in the US-listed retailer made gains in US trading having come into this latest news down by around a fifth so far in 2026. US focused Amazon.com Inc (NASDAQ:AMZN) are up by a tenth during that time while fellow China-focused PDD Holdings Inc ADR (NASDAQ:PDD) and owner of Temu are down by close to a third. The S&P 500 is up 13% year-to-date.

Alibaba businesses include its Taobao (consumer-to-consumer) and Tmall (business-to-consumer) online selling sites as well as its cloud data hosting division.

Alibaba’s new Zhenwu AI chip is scheduled for mass production and commercial release in the first quarter of 2027. The group’s existing chips are already used by hundreds of customers across industries including automotive, finance, manufacturing and energy.

China e-commerce revenue during its last quarter to late June fell 7% year-over-year while those for cloud computing accelerated to a gain of 45%.

Second-quarter results to late September are likely to be announced mid-to-late November.

ii view:

Started in 1999 and coming to the US stock market in 2014, Alibaba today employs over 130,000 people. The group highlights its mission as not pursuing size or power but to aspire to be a good company that will last for 102 years. As well as other Chinese retailers listed in the US such as JD.com Inc ADR (NASDAQ:JD), its data centre business also rivals those run by Amazon, Microsoft Corp (NASDAQ:MSFT) and Google owner Alphabet Inc Class A (NASDAQ:GOOGL).  

For investors, the tough economic backdrop for Chinese consumers is not to be ignored. Investment being made into AI infrastructure has to generate appropriate returns over the longer term, with competition within the area increasingly competitive. The West’s now more strained relationship with China is not to be forgotten, while China’s own regulatory environment and the mix of communism with capitalism also warrants consideration.

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To the upside, Alibaba’s exposure to Chinese consumers remains significant. Diversity of business types includes both retailing and cloud data hosting services supporting AI computing. Share buybacks to the value of $162 million were made over the group’s last quarter, while a forecast dividend yield of around 1% is not to be ignored.

In all, and while risks remain, a consensus analyst estimate of fair value above $180 appears to point to continuing longer-term optimism on Wall Street.

Positives

• Exposure to potential Chinese economic growth
• Growing datacentre business

Negatives

• High regulatory uncertainty
• Currency moves can hinder performance

The average rating of stock market analysts:

Buy