Alibaba Says Its New AI Model Is Better Than DeepSeek

After DeepSeek threw the artificial intelligence (AI) race into a frenzy earlier this week, another Chinese tech company claims to have one-upped its rivals.

Alibaba has launched Qwen 2.5-Max, an upgraded AI model, it claims outperforms OpenAI's GPT-40, DeepSeek-V3, and Meta's Llama-3.1-405B, reported Yahoo! Finance.

"Qwen 2.5-Max outperforms ... almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405B," Alibaba's cloud unit said in an announcement.

Like DeepSeek, Alibaba claimed that its AI costs less to develop and use compared to others on the market. These revelations have caused investors to question huge spending plans by leading AI firms.

AI data centers are already receiving criticism from experts who argued their potential to usher in an environmental crisis due to their growing demand in the U.S.

The surprise release, coinciding with Lunar New Year, highlights growing competition in China's AI sector, where DeepSeek's rapid rise has disrupted both domestic and global markets.

DeepSeek's low cost AI models have also shaken Silicon Valley, prompting Chinese companies like ByteDance and Baidu to release updated versions.

Alibaba previously slashed AI prices in response to DeepSeek's dominance of being open-source and relatively cheap (i.e., it costs $0.14 per 1 million tokens) to run.

As the AI race intensifies, DeepSeek founder Liang Wenfeng remained focus on achieving artificial general intelligence (AGI), a theoretical concept where AI creates machines with human-like intelligence.

The rise of cheaper, faster Chinese AI and its effect on U.S. markets

U.S. tech stocks like Nvidia, Micron, Arm Holdings and Broadcom, took a tumble after DeepSeek upended the AI race this week.

President Donald Trump said the rise of DeepSeek AI should be a "wake up call" for the country's tech industry.

Throughout the U.S., companies are investing in AI data centers while current technology continues to strain the country's power grid.

Meta shelled out $75 billion to build data centers in Manhattan and Richland Paris, Louisiana.

Amazon invested $10.45 billion towards data centers in the United Kingdom and requested a proposal seeking to increase nuclear energy flow to its data center in Pennsylvania.

Microsoft and BlackRock partnered to raise $100 billion for AI data centers.

MSN reported 220 new gas power plants to power AI data centers are in development across the country.

Last week, Santee Cooper electric utility announced its plan to restart mothballed nuclear plants, V.C. Summer Nuclear Station, to power AI data centers.

A Goldman Sachs report revealed AI is poised to drive a 160% increase in data center power demand.