Shares in Alibaba Group Holding (NYSE: BABA) were up by as much as 5.5% in Wednesday (Thursday AEDT) trading in the United States following revelations that the China-based tech stock had released a new version of its Qwen 2.5-Max artificial intelligence model.
What excited the market were claims by Alibaba that Qwen 2.5-Max surpasses the highly-acclaimed DeepSeek-V3 which shocked the market with revelations that it was a more efficient and infinitely cheaper version of its U.S. counterparts.
Not only did the release of DeepSeek-V3 shock Silicon Valley and cause tech shares to plunge, it made investors question huge spending plans by leading AI firms in the U.S.
"Qwen 2.5-Max outperforms... almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405B," Alibaba's cloud unit noted in an announcement posted on its official WeChat account, referring to OpenAI and Meta's most advanced open-source AI models.
Coinciding with Lunar New Year, the surprise release of Qwen 2.5-Max has not only highlighted growing competition in China's AI sector but forced Chinese companies like ByteDance and Baidu to slashed their AI model prices and release updated versions.
Two days after the release of DeepSeek-R1, TikTok owner ByteDance also released an update to its flagship AI model, which it claimed outperformed Microsoft-backed OpenAI’s o1 in AIME, a benchmark test that measures how well AI models understand and respond to complex instructions.
This is said to echoe DeepSeek’s claim that its R1 model competes with OpenAI’s o1 on several performance benchmarks.
In the U.S., a resurgence by U.S. companies investing in AI data centres is understood to be straining the country's power grid.
Meta has invested $75 billion to build data centres in Manhattan and Richland Paris, Louisiana.
Amazon invested $10.45 billion towards data centres in the UK and is planning to increase nuclear energy flow to its data centre in Pennsylvania.
Then there’s Microsoft and BlackRock which partnered to raise $100 billion for AI data centres.
According to a Goldman Sachs report, AI is poised to drive a 160% increase in data centre power demand.
Meanwhile, the White House has asked the National Security Council to review potential security risks linked to DeepSeek’s expansion.
It’s understood that one American company blocked DeepSeek accounts last year over suspicions it was using OpenAI’s proprietary model outputs to train a competing AI — which is in breach of OpenAI’s terms of service.
