Why Alibaba Rallied Today

Key Points

• Nvidia announced it should be able to resume shipping its H20 chips to China soon.

• The move bolstered the stocks of virtually all Chinese AI companies.

• Alibaba's latest Qwen models have been shooting up the open-source model ranks.

• 10 stocks we like better than Alibaba Group ›

Shares of Chinese tech giant Alibaba (NYSE: BABA) rallied 8.1% on Tuesday.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Alibaba is not only a leader in e-commerce and digital payments but also an artificial intelligence (AI) leader in China. Its open-source model Qwen is thought to be among the best open-source models out there, ranking close to or above the latest DeepSeek on independent scoring boards such as Live Bench.

Therefore, Alibaba rose today after AI chip giant Nvidia (NASDAQ: NVDA) suggested it would be able to recommence shipping its H20 AI chips to China once again after an April ban.

Nvidia assured investors it has assurances from the White House

Late on Monday, Nvidia wrote on its company blog that "NVIDIA is filing applications to sell the NVIDIA H20 GPU again. The U.S. government has assured NVIDIA that licenses will be granted, and NVIDIA hopes to start deliveries soon."

In April, Nvidia was forced to stop shipments of its H20, which is a modified version of its Hopper AI chips to fit the Chinese market, and to apply for a license. Whether that halt had to do with the administration's negotiations with China over trade policy or not is unclear. After all, those trade negotiations are still ongoing.

Nevetheless, Nvidia's announcement boosted virtually all Chinese AI companies. Alibaba certainly fits that mold, with its Qwen open-source model being one of the best-performing models in China. Last month, Qwen's latest model leapt to the top of the Hugging Face leaderboard as the highest-performing open-source model today.

In addition to Qwen, Alibaba has also invested in an AI start-up named Moonshot. Moonshot just released its Kimi K2 AI model, which Kimi management claims tops the best ChatGPT models from OpenAI and Anthropic's Claude models in the specific task of software coding and at a fraction of the cost.

Image source: Getty Images.

Alibaba should rank among the top of China's AI companies

It remains to be seen how China's AI companies will be able to compete against their U.S. counterparts, but that may not matter much in the case of Alibaba's stock, which revolves around its core China e-commerce business. As long as Alibaba has access to top AI chips and talent versus its competitors, it should be able to translate that into revenue and profit growth across its business empire spanning e-commerce, cloud, and digital finance.

Should you invest $1,000 in Alibaba Group right now?

Before you buy stock in Alibaba Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alibaba Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

Now, it’s worth noting Stock Advisor’s total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.