Alibaba’s Strategic Pivot: AI and Cloud Computing Drive Future Growth

Alibaba US01609W1027

Alibaba is accelerating its strategic focus, placing artificial intelligence (AI) and cloud services at the core of its long-term growth plan. The Chinese technology giant's recent unveiling of a new flagship AI model underscores a deliberate shift to solidify its technological competitiveness and reinforce its cloud division as a primary engine for expansion.

On January 26, Alibaba officially launched Qwen3-Max-Thinking, the new top-tier model within its proprietary Qwen family. The company asserts that its capabilities are competitive with leading international systems, citing strong performances across multiple established benchmark evaluations.

This launch represents more than a routine update; it is viewed as a significant milestone in China's development of large language models. It aims to demonstrate that domestic providers remain technologically competitive on the global stage. Key technical innovations introduced with the model include:

• Adaptive Tool Calling: The system can autonomously select and employ external tools—such as querying databases or utilizing specialized software—to enhance its problem-solving abilities.
• Test-time Scaling: This technique allows for the flexible increase of computational power to improve the quality of reasoning and complex thought processes.

Qwen3-Max-Thinking is the latest in a series of rapid AI initiatives Alibaba has rolled out in recent months.

Hardware Access: A Critical Component

Advanced software requires powerful hardware. A relevant development occurred on January 23, when reports indicated that Alibaba and other major Chinese tech firms received preliminary regulatory approval to prepare orders for advanced Nvidia AI chips.

This signals a potential pathway to secure access to high-performance processors despite existing export controls. For Alibaba, such access is a crucial element for operating and further developing models like Qwen3-Max-Thinking at scale.

The Converging Path of Cloud and AI

The AI focus dovetails seamlessly with Alibaba's broader corporate strategy. The company is positioning its Cloud Intelligence Group as a central growth pillar. This move aligns with a favorable market outlook, as China's cloud market is projected to expand to approximately $61.19 billion by 2026—a sector where Alibaba Cloud already holds a strong position.

Sophisticated AI models can serve as a key differentiator in this competitive space: superior proprietary models make the platform and associated services more attractive to enterprise clients seeking to build applications ranging from virtual assistants to process automation.

This strategic direction also receives implicit policy support. Reports suggest China's 15th Five-Year Plan emphasizes digitalization and industrial transformation. Companies making substantial investments in cloud infrastructure and AI are operating squarely within national priority areas, an environment likely to foster additional projects and collaborations.

Market Performance and Forward Look

The strategic repositioning is reflected in notable stock price dynamics. Over a twelve-month horizon, the shares have gained roughly 68% from their 52-week low of €85.90. As of the latest close at €144.60, however, they remain about 10% below the high of €161.60 recorded on October 2, 2025. A 14-day Relative Strength Index (RSI) reading of 29.4 indicates a short-term oversold condition, while the price remains comfortably above the 200-day moving average of €124.07.

More concrete evidence of how significantly cloud and AI are contributing to financial results, along with Alibaba's associated targets, is anticipated with upcoming quarterly earnings. The next financial report is currently expected around February 19, 2026, though the date remains unconfirmed. Until then, the launch of Qwen3-Max-Thinking stands as a clear indicator of where Alibaba intends to channel its resources and strategic emphasis in the years ahead.