Chinese AI Models Boost Alibaba and Tencent Shares While Weighing on Chip Stocks

Alibaba and Tencent stocks surged on Monday as newly launched Chinese AI models, Qwen3.8 Max and Kimi K3, demonstrated performance near that of leading U.S. models. The shift toward these AI platforms coincided with a decline in South Korea's semiconductor index, reflecting a rotation in investor interest.

AI Model Performance and Market Impact

Alibaba's Qwen3.8 Max, boasting 2.4 trillion parameters, is positioned just behind Anthropic's Claude Fable 5 in benchmark performance. Meanwhile, Moonshot AI's Kimi K3, with 2.8 trillion parameters, achieved a score of 57 on the Artificial Analysis Intelligence Index and surpassed competitors in front-end coding tests. Kimi K3's pricing at approximately $3 per million input tokens marks it as the most expensive Chinese AI model, about 60% the cost of Claude Opus 4.8.

Following these developments, Alibaba’s shares climbed up to 6% in Hong Kong trading and gained approximately 4% in U.S. premarket, while Tencent increased by 4%. The Hang Seng Tech Index rose 4%, and the broader Hang Seng Index added more than 2%. Baidu also saw a 3.8% rise in U.S. premarket trading.

South Korea's KOSPI index fell 4.5%, driven by losses exceeding 4% in Samsung Electronics and SK Hynix shares. The index remains 28% below its level from a month ago, despite a 55% increase over the past year.

Investor and Analyst Perspectives

Both Alibaba and Tencent are investors in Moonshot AI, with Alibaba holding a 36% stake acquired in February 2024. Analysts at Bernstein highlight that the growing competitiveness of AI models strengthens cloud providers and internet platforms, potentially boosting Alicloud revenue due to Kimi's success. Alibaba benefits from regulatory approval for its Qwen AI in China, powering domestic AI services.

Citi analysts emphasized that companies with integrated capabilities across chips, cloud infrastructure, AI models, and applications, such as Alibaba, have an advantage in the market. Tencent’s desktop AI assistant WorkBuddy, attracting 8 to 9 million monthly visitors, is noted as an undervalued asset.