Alibaba Doubles Down on AI With New Model and BMW Partnership

Chinese tech giant Alibaba (NYSE: BABA) has doubled down on artificial intelligence (AI) and announced a new low-cost model that can process audio and videos on phones. Separately, the company has announced a partnership with BMW for AI-cockpit solutions.

Alibaba has debuted its “Qwen2.5-Omni-7B” which is a multimodal model in its Qwen series with the ability to process text, images, audio, and videos. It can also generate real-time text and natural speech responses.

In its release, Alibaba said, “This unique combination makes it the perfect foundation for developing agile, cost-effective AI agents that deliver tangible value, especially intelligent voice applications.”

Alibaba Debuts New AI Model

It added, “For example, the model could be leveraged to transform lives by helping visually impaired users navigate environments through real-time audio descriptions, offering step-by-step cooking guidance by analyzing video ingredients or powering intelligent customer service dialogues that really understand customer needs.

Recently, Alibaba also announced a partnership with BWW and the German auto giant will use its AI models in its upcoming cars in China. Apple has also partnered with Alibaba for AI which will help the Cupertino-based company its “Apple Intelligence” features to China.

Alibaba Has Been Releasing Low-Cost AI Models

Alibaba has been releasing several low-cost AI models. Earlier this month, researchers at Alibaba’s Tongyi Lab unveiled the new open-source R1-Omni that adds another layer of understanding to computer vision and can infer the emotional state of a person in a video. The updated model is an enhanced version of HumanOmni, which is an open-source model from the same researcher, Jiaxing Zhao.

Separately, Alibaba unveiled a new version of its AI assistant mobile app Quark, and the “New Quark” now integrates functions including deep thinking and a chatbot. The app is still in pilot mode and will be gradually available to more users.

Alibaba Has Raised Its Game in AI

Alibaba has raised its game in AI which has got a thumbs up from the markets. There has been a renewed interest in Chinese stocks ever since DeepSeek announced that its AI model, which it built for just about $6 million, performed better than Western rivals like OpenAI on several parameters.

While US tech stocks have rallied and delivered double-digit returns in the previous two years, Chinese tech stocks, especially Alibaba, have sagged after peaking in 2020. That year, China cracked down on the company, and Alibaba had to cancel the IPO of its subsidiary, Ant Financial. The tech crackdown only worsened in 2021, and although Alibaba paid a record $2.8 billion fine to settle the antitrust case, markets were not too convinced that the worst was over for the company.

Notably, Ma wasn’t seen in public for several weeks after the cancelation of Ant IPO in November 2020 and appeared in an online interaction only in January 2021.

Alibaba Chairman Warns of AI Bubble

Meanwhile, Alibaba Chairman Joe Tsai has warned of an AI bubble in the US. Speaking at the HSBC Global Investment Summit in Hong Kong, Tsai said he was “astounded by the type of numbers that’s being thrown around” in the US.

“People are talking about $500 billion, several hundred billion dollars. I don’t think that’s entirely necessary. I think in a way, people are investing ahead of the demand that they’re seeing today,” added Tsai.

Notably, US tech giant including Microsoft, Alphabet, Amazon, and Microsoft have vowed to invest billions of dollars towards enhancing their AI capabilities including building data centers.

However, there are some signs of companies overestimating demand and Microsoft has reportedly canceled leases for some data centers. In his note, TD Cowen analyst Michael Elias said, “In our view, the pullback on new capacity leasing by Microsoft was largely driven by the decision to not support incremental Open AI training workloads.”

AI War Between the US and China

He added, “However, we continue to believe the lease cancellations and deferrals of capacity points to data center oversupply relative to its current demand forecast.”

Meanwhile Mizuho analyst Jordan Klein believes that investors should brace for more such “cautious comments” about AI from China as the AI ecosystem “becomes more of a global strategic arms race.” Notably, there is an apparent AI war between the US and China and Trump previously said that DeepSeek’s low-cost AI model was a wakeup call for US companies.

“Less than a week after end of [Nvidia’s] big splashy annual GTC event, we get repeated headlines out of China [from] tech internet leaders that are definitely negative shots against both Nvidia and the entire AI investment narrative that generally centers 100% on U.S. suppliers and tech company leaders,” said Klein in his note.

Incidentally, Alibaba has also doubled down on AI investments and vowed to invest $52 billion towards AI and cloud computing over the next three years, which happens to be the single largest investment in this field from a Chinese private company.

Xi Jinping Met Chinese Entrepreneurs

Last month, Chinese President Xi Jinping met the country’s entrepreneurs, including Alibaba’s co-founder Jack Ma, at a symposium. Ma’s participation in the event with Jinping became all the more important as the Chinese billionaire was the face of China’s crackdown on its tech moguls whom the Communist Party believed had become too big for their shoes.

Tsai said that the meeting “was a very, very clear signal to the business community that, go ahead, reinvest in your business and also go out and hire people,