Alibaba’s cloud division claims the Qwen 2.5-Max outperforms DeepSeek-V3, Llama-3.1-405B, and ChatGPT-4o, marking a significant push to stay competitive in China’s evolving AI market.

In a surprising move on the first day of the Lunar New Year, Chinese tech giant Alibaba released its latest artificial intelligence model, Qwen 2.5-Max, claiming it outperforms some of the leading AI systems in the industry, including DeepSeek-V3 and OpenAI’s ChatGPT-4o. The timing of the release, coinciding with the Chinese holiday when most workers are off, has raised questions about the pressure being placed on domestic players by the rapid rise of DeepSeek, a Chinese AI startup that has become a rising competitor in the AI market. 

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According to Alibaba’s cloud division, the Qwen 2.5-Max model outperforms several prominent AI platforms, including DeepSeek-V3 and Meta's Llama-3.1-405B, as well as OpenAI’s GPT-4o. Alibaba’s announcement, made through an official WeChat post, marks a significant push from the company to stay competitive within China’s increasingly heated AI landscape. This is a notable development as Alibaba AI research continues to evolve, with its new Alibaba AI model targeting a growing market for next-gen AI models.

DeepSeek’s disruption in China’s AI market

DeepSeek’s rise has disrupted both domestic and international tech companies. The startup’s release of the DeepSeek-V3 powered AI assistant on January 10 stunned Silicon Valley, contributing to a sharp decline in tech stocks. DeepSeek's success has largely been driven by its ability to offer advanced AI models at a significantly lower cost compared to industry leaders, sparking concerns about the sustainability of large spending in AI by companies like OpenAI and Microsoft.

The Alibaba vs DeepSeek competition has become a focal point in China’s rapidly evolving AI sector. Following DeepSeek’s advancements, other Chinese tech companies have been quick to respond. ByteDance, the parent company of TikTok, updated its own AI model just days after DeepSeek’s R1 model debut. ByteDance claims that its updated model now outperforms OpenAI’s o1 model in the AIME benchmark, which evaluates AI’s capacity to understand and execute complex tasks.

AI price wars and the road ahead

DeepSeek’s influence extends beyond product releases. When DeepSeek launched its DeepSeek-V2 model in May 2023, it initiated an unprecedented price war in the Chinese AI market. The model was priced at just 1 yuan ($0.14) per million tokens, a move that forced companies like Alibaba to drastically cut prices to remain competitive. Alibaba announced a price reduction of up to 97% on some of its own AI models following DeepSeek’s release.

Liang Wenfeng, founder of DeepSeek, has downplayed concerns over price competition. In a rare interview, Liang emphasized that his company’s main goal is not to win price wars but to develop artificial general intelligence (AGI) – a system that surpasses human intelligence in most economically valuable tasks. Liang’s comments suggest that, unlike larger corporations with top-down structures, DeepSeek’s lean operation and focus on innovation may give it an edge in the future of AI.

As AI technology looms on the horizon, the future of the industry seems poised for a dramatic shift. The growing DeepSeek-V3 vs Alibaba AI competition showcases the accelerating pace of AI innovation in China, particularly in the development of next-gen AI models. While companies like Alibaba have vast resources and workforces, DeepSeek operates more like a research lab, staffed with young graduates and PhDs from top Chinese universities. Liang has argued that large tech companies, burdened by high operational costs and rigid structures, may struggle to adapt to the future demands of the AI industry.

As the race for AI supremacy intensifies, the latest developments signal a shift in how artificial intelligence is being developed, priced, and competed for in China and globally. With DeepSeek leading the charge on cost-effective innovation, its growing influence is likely to continue shaping the future of AI in China and the broader tech landscape.