China’s biggest tech firms, namely Alibaba (BABA), ByteDance, and Tencent (TCEHY), are increasingly turning to Huawei’s new Ascend 950 AI chips. The shift comes as Nvidia (NVDA) faces limits on selling its most advanced chips in China, giving local players room to gain share.
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While Nvidia still leads globally, U.S.-China trade rules have slowed access to its top chips. Huawei is stepping in with its new AI chip, the Ascend 950PR, which offers stronger performance than the lower-end Nvidia chips currently available in China.
At the same time, the launch of the DeepSeek V4 model has added to the momentum. Built to run on Huawei chips, it shows that advanced AI systems can work without Nvidia. Also, Huawei has made it easier for companies like Alibaba to switch from Nvidia chips to its own hardware by ensuring compatibility with existing AI software.
Alibaba Builds Its AI Stack on Local Chips
Alibaba is going beyond buying Huawei chips and is building its AI platform around them. As part of this push, Alibaba Cloud launched the DeepSeek model on the same day it was released, showing how quickly it is moving.
This shift to local chips also helps Alibaba lower costs, which is allowing the company to offer AI services at much cheaper rates, with DeepSeek already priced at a steep discount to attract users.
However, supply remains a concern. Huawei plans to ship about 750,000 chips this year, but demand from Alibaba, Tencent, and ByteDance is much higher. At the same time, U.S. export rules prevent China’s access to new tools and spare parts, limiting Huawei’s ability to procure more equipment and increase its output. As a result, companies are rushing to secure their supply as early as possible.
Is Alibaba Stock a Buy Now?
Wall Street remains constructive on the stock. Alibaba carries a Strong Buy consensus rating based on 14 Buy ratings and two Holds over the past three months. The average BABA price target stands at $182.29, suggesting roughly 39.31% upside from current levels.
