AI showdown! Alibaba claims its new model beats DeepSeek and ChatGPT

The timely announcement comes after Chinese AI start-up DeepSeek rattled the markets on Monday and prompted a tech-led selloff in the US and Europe after the company claimed its AI is more cost-effective and performs better than leading US models.

Alibaba now claims its new AI model, Qwen 2.5-Max, an open-source, is even more impressive than that of DeepSeek, putting pressure on its domestic and overseas rivals.

The e-commerce giant said Qwen 2.5-Max is also able to outperform OpenAI's GPT-4 and Meta's (META) Llama-3.1-405B.

Alibaba's share price was up 1.2% at the time of writing with its stock up 25% in six months. Investors will be keeping an eye on how the AI dominance quest plays out as the competition heats up between the tech titans.

Risk for a renewed US-China trade war

As reported by Euronews Business on Tuesday, this will add to the competition woes facing Europe and the US in the sector.

However, following DeepSeek's update, US President Donald Trump said the breakthrough was "a wake-up call" for American tech companies and the need for the US "to be laser-focused on competing". He also expressed confidence that the US tech companies would maintain dominance in the AI industry. 

Meanwhile, Trump's return has reignited concerns about a US-China trade war No 2. "For now, it can confidently be said that today has sparked a re-think of the 'AI trade' and risks of a US-China trade war," Kyle Rodd, a senior market analyst at Compital.com, wrote in a note to clients.

So far, President Trump has not imposed the 60% tariff on Chinese imports he pledged during his campaign. Instead, his administration has initiated an assessment, with findings expected by 1 April.