Alibaba joins Tencent Holdings Ltd. and Silicon Valley peers like Microsoft Corp. in placing big bets on generative AI, the technology that powers ChatGPT.
Alibaba Group Holding Ltd. spearheaded the biggest ever funding round for an AI startup in China. This is only the most recent in a series of substantial investments that indicate the e-commerce giant is once again putting money into the pursuit of expansion.
Among Silicon Valley rivals like Microsoft Corp. and Tencent Holdings Ltd., Alibaba is also heavily investing in generative AI, the technology behind ChatGPT. According to sources familiar with the matter, it spearheaded a $1 billion investment round in Moonshot AI alongside current backer Monolith Management, thereby increasing the valuation of the one-year-old company by a factor of eight to approximately $2.5 billion. The individuals, who asked to remain anonymous due to the nature of the deal, added them to the list of prior backers that included Meituan's investment arm and Hongshan, formerly Sequoia China.
One of the more well-known Chinese firms working on generative AI, Moonshot AI aims to one day compete with OpenAI and Google. It was founded in March 2023. Its Kimi chatbot was released to the public in November, and since then, it has developed a platform where developers can create AI apps, based on its model. The company raised first capital with a valuation of only $300 million.
The financial information were initially revealed by local media, including 36kr, but Moonshot AI chose not to comment on them. Despite a lack of information, Monolith has acknowledged its involvement in the most recent round. Requests for comment were not responded to by representatives of Alibaba.
Joseph Tsai and Eddie Wu, the newly appointed chief executive officers of Alibaba, have vowed to revive the floundering corporation that has been battered by two years of regulatory scrutiny and a severe economic slump. It's steering fresh funding toward revolutionary technologies like AI and coordinating a convoluted two-way split that will elevate cloud and logistics as core revenue areas. Half of China's generative AI enterprises are hosted by the cloud unit, according to Tsai, and the unit services around 80% of China's IT companies.
Unfortunately, they're joining a more competitive industry, as major IT companies and venture capitalists are investing billions into artificial intelligence (AI) training and development, following a similar trend in Silicon Valley and Europe. In addition to Baichuan and Zhipu, other Chinese AI firms raised substantial funding.
And that's without even considering the persistent worries about US sanctions, which prevent Chinese companies from purchasing the most potent Nvidia Corp. chips utilized for AI model training and execution. Because AI has geopolitical and military uses, Washington has focused on China's AI ambitions, further inflaming an already volatile relationship.
In 2023, Alibaba and Tencent, Alibaba's longtime adversary, participated in a $300 million-plus round for Zhipu. In an effort to reinvigorate its cloud business, the corporation is integrating artificial intelligence (AI) and its in-house model, Tongyi Qianwen, with its extensive entertainment division.
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