Key Points
- Alibaba released its Qwen 2.5-Max AI model, claiming it surpasses DeepSeek-V3, GPT-4o, and Llama-3.1-405B.
- DeepSeek’s rapid rise has shaken the global AI industry, prompting stock declines in Silicon Valley.
- DeepSeek-V2 sparked an AI price war, forcing Alibaba, Baidu, and Tencent to cut model costs.
- Unlike large corporations with high costs, DeepSeek operates with a lean, research-focused team.
Chinese tech giant Alibaba has launched a new version of its Qwen 2.5 AI model, claiming it surpasses top competitors, including DeepSeek-V3, OpenAI’s GPT-4o, and Meta’s Llama-3.1-405B. The release of Qwen 2.5-Max on the first day of the Lunar New Year, a major holiday in China, highlights the growing pressure on Alibaba and other domestic firms as DeepSeek’s rapid rise challenges local and global AI leaders.
DeepSeek’s AI assistant, powered by DeepSeek-V3, was introduced on January 10, followed by the R1 model on January 20. The impressive performance of these models has shaken Silicon Valley, contributing to a drop in tech stock prices. Investors question whether U.S. AI firms’ massive spending strategies can compete with DeepSeek’s low-cost development model.
The success of DeepSeek has also intensified competition within China. In response, ByteDance, the parent company of TikTok, released an update to its flagship AI model just two days after DeepSeek-R1 launched. ByteDance’s model outperforms OpenAI’s o1 model in AIME, a widely used AI benchmark.
DeepSeek’s previous model, DeepSeek-V2, triggered an AI price war in China after its release in May 2024. The model’s low cost—just 1 yuan ($0.14) per 1 million tokens—forced Alibaba’s cloud unit to cut prices by up to 97% to remain competitive. Other tech giants, including Baidu (9888.HK) and Tencent (0700.HK), followed with their price reductions.
Despite the fierce market competition, DeepSeek founder Liang Wenfeng has emphasized that AGI (Artificial General Intelligence) is the startup’s ultimate goal, rather than engaging in price wars. Unlike large corporations with rigid structures and high operational costs, DeepSeek operates leanly, employing mainly young Ph.D. graduates and researchers. Liang believes that tech giants may struggle to keep pace with the AI industry’s future demands due to their bureaucratic nature and limited flexibility.
As China’s AI race intensifies, major players like Alibaba and ByteDance are doubling on innovation to counter DeepSeek’s meteoric rise. This is setting the stage for continued competition in the global AI landscape.