Nvidia (NVDA) is falling 4% after Alibaba (BABA) reported today that its new AI model performs better than DeepSeek’s offering. The latter Chinese start-up’s model, which reportedly performed better than OpenAI’s product in a number of areas, cost only about $5.6 million to train, according to DeepSeek.
BABA’s news may be renewing fears, first ignited by DeepSeek, that Chinese companies have discovered ways to launch highly advanced AI models without using NVDA’s recently made, very expensive chips.
More Information About BABA’s AI Model
Called Qwen 2.5-Max, BABA’s model “demonstrated significant advantages across most benchmarks” relative to Meta’s (META) Llama-3.1-405B, BABA reported. Llama-3.1-405B was launched last July. BABA added that “Qwen2.5-Max outperforms DeepSeek V3 in (a number of) benchmarks.”
Since the U.S. government has heavily restricted China’s access to America’s most advanced AI chips, the Street may fear that BABA created Qwen 2.5-Max using relatively old, cheap GPUs from Nvidia. As a result, Alibaba’s announcement could be renewing worries about NVDA’s outlook that were first sparked by DeepSeek earlier this week.
The Price Action of NVDA
In the last month, the shares have sunk 8%, while they are down 11.5% in the last three months.
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Disclosure: None. This article is originally published at Insider Monkey.
