Alibaba (NYSE:BABA) has dropped a bombshell by cutting the price of its visual language model Qwen-VL by up to 85%. The move, announced Tuesday, marks an aggressive effort to dominate China’s hottest AI market, where competition is heating up between tech giants like Tencent (TCEHY), Baidu (NASDAQ:BIDU) and ByteDance. It shows. Alibaba’s latest price cuts follow previous price cuts of as much as 97% and strengthen its strategy to lock in enterprise customers by making cutting-edge AI solutions more accessible. But despite the high-profile move, the stock remained largely unfazed, closing just 0.5% higher in Hong Kong.
So what’s the play here? While other companies are focusing on consumer AI like OpenAI’s ChatGPT, Alibaba is betting big on enterprise applications. The Qwen series, which processes both text and images, is already used by more than 90,000 companies, and this price change could open the floodgates to even broader adoption. It’s clear that Alibaba wants to be the go-to for companies looking to integrate AI into their operations without breaking the bank. These price cuts aren’t just discounts, they’re a declaration of war in the fight for AI supremacy.
For investors, this increases risk. The big question is: Will these price cuts drive adoption that justifies the revenue hit? Or will this spark a brutal price war that erodes margins across the sector? As generative AI reshapes the tech world, Alibaba’s all-in strategy could be a juggernaut with huge profits , or it could be gambling. Either way, the market will be watching to see if this is the spark that sets Alibaba apart, or just another salvo in an increasingly crowded AI battlefield.
This article first appeared on GuruFocus.
