Alibaba Group Holding Limited (NYSE:BABA) shares are trading higher on Wednesday, along with other US-listed Chinese stocks, amid a tech rally driven by Chinese artificial intelligence (AI) startup DeepSeek.

What To Know: The Chinese startup released its DeepSeek R1 AI model in January, rattling the US market, especially American technology stocks, according to BBC. Reportedly, DeepSeek’s reasoning model, R1, is as powerful as OpenAI’s reasoning model, which was released at the end of last year.

Furthermore, DeepSeek claims to have developed and trained its model for a price tag of $6 million. OpenAI founder Sam Altman said ChatGPT-4 was trained at a cost of more than $100 million.

US-listed Chinese stocks are currently rallying, as DeepSeek’s release may have sparked speculation about whether American tech companies will retain their leadership in the AI sector. The lower cost and comparable performance of DeepSeek’s model have likely boosted investor confidence in these stocks, helping to fuel the recent surge.

Baidu’s Ernie 5.0 could further strengthen investor confidence in Chinese AI stocks, but its success will likely hinge on its capabilities and how it compares to models like ChatGPT.

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BABA Price Action: At the time of publication, Alibaba shares are trading 5.23% higher at $118.68, according to data from Benzinga Pro.

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