Alibaba Group Holding (NYSE:BABA) is making waves in the AI space with its new artificial intelligence model, QwQ-32B. Developed by its AI unit, Qwen, this model has 32 billion parameters and claims performance comparable to DeepSeek's R1 model which has 671 billion parameters. This is in line with China's broader push to support key industries such as AI, humanoid robots and 6G.

After the QwQ-32B announcement, Alibaba's Hong Kong shares surged over 8% and this year is up nearly 70%. As of March 9, the company's market cap is around $345 billion, according to Companies MarketCap. Alibaba's AI strategy is gaining traction.

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According to Qwen, although QwQ-32B has fewer parameters than DeepSeek's R1, it excels in mathematical reasoning, coding and problem solving. This means operational cost savings and Alibaba is more competitive in the AI race. According to Alibaba Cloud, the company is also working with tech firms to put AI into consumer devices so its advancements can reach a broader audience.

Beijing's backing is a big reason for Alibaba's aggressive investment in AI. Alibaba Group announced a plan to invest $53 billion for cloud computing and AI infrastructure. CEO Eddie Wu called AI a "once in a generation" opportunity that can replicate both intellectual and physical labor globally.

Alibaba is not alone in going all in on AI. According to Digitaltrends, Amazon Web Services is planning to spend around $100 billion next year, mostly on AI initiatives while Microsoft (NASDAQ:MSFT) is expected to spend around $80 billion with a big chunk on AI development. But experts are concerned.

The rapid development of AI without ethics is raising big concerns of unintended consequences, including decision making bias and job displacement. According to The Guardian, recent rollbacks of AI-related labor protections in the US has made workers more vulnerable to automation job losses and deteriorating employment conditions.

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