Alibaba (BABA) (HK:9988) shares spiked on Wednesday after reports confirmed the e-commerce and cloud giant had signed a landmark deal with China Unicom. The country’s second-largest telecom company will deploy Alibaba’s homegrown AI chips in its new data center project. The announcement sent Alibaba’s stock up more than 5% in Hong Kong and over 2% in U.S. premarket trading at the time of writing.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
China Unicom will use Alibaba’s Pingtouge, or T-Head, AI accelerators in a new data center project in Qinghai province. The chips will be deployed alongside products from other domestic players such as MetaX and Biren Technology.
Beijing’s Chip Rules Lift Local Players
This deal comes as Beijing pushes harder for homegrown technology. The Financial Times reported that regulators have told companies, including TikTok owner ByteDance and Alibaba, to halt testing and orders of Nvidia’s (NVDA) new RTX 6000D chip.
As a result, Nvidia shares slipped in premarket trade, while Alibaba’s rally drove the stock to its highest level since 2021, reflecting investor confidence in its AI plans.
The latest win indicates that Alibaba’s role in AI now extends beyond software models to include the chips and computing power needed to run them.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain bullish about Alibaba’s stock trajectory. With 17 Buy ratings and one Hold rating, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $167.11 implies about 3.02% upside potential from current levels.
