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Alibaba Group Holding Ltd (NYSE:BABA) is taking the lead in a financing round that aims to raise at least $600 million for the Chinese AI startup MiniMax, marking its second significant investment in artificial intelligence this year as it seeks avenues for growth.
This investment positions MiniMax, a two-year-old company focusing on generative AI similar to ChatGPT, at a valuation of over $2.5 billion, with both Alibaba and HongShan (formerly Sequoia China) committing to the financing.
This initiative reflects Alibaba’s strategy to invest in emerging leaders within the AI sector, mirroring its previous $1 billion investment in Moonshot AI, which also valued the startup at around $2.5 billion, Bloomberg reports.
The investment spree indicates Alibaba’s renewed focus on growth, led by Joseph Tsai and Eddie Wu, amidst efforts to rejuvenate the company after it faced regulatory challenges and an economic downturn.
Given its potential military and commercial applications, the Chinese government’s emphasis on AI research underscores the technology’s critical role.
Alibaba’s early move in 2024 to secure deals in AI sets it apart from other Chinese tech giants like Tencent Holdings Ltd (OTC:TCEHY) and Baidu Inc (NASDAQ:BIDU), which have also been active in funding AI startups.
Alibaba is investing in AI and undertaking significant restructuring to foster independence across its business sectors, from cloud computing to logistics.
The company aims to rejuvenate its cloud segment and leverage AI across its extensive portfolio, which includes entertainment. Tsai highlighted the cloud unit’s pivotal role in hosting numerous Chinese generative AI firms and serving most of the nation’s tech companies, showcasing Alibaba’s strategic investments in cutting-edge technology to maintain its leadership and innovation in the digital era.
Separately, Alibaba also launched a significant discounting campaign in the cloud computing industry, cutting prices by as much as 55% across over 100 services to recapture market share within a fiercely competitive landscape.
This action quickly elicited a reaction from JD.com Inc (NASDAQ:JD), a principal rival in the e-commerce and cloud service arenas. It disclosed its pricing reductions on the same day via its WeChat account.
Investors can gain exposure to ProShares Online Retail ETF (NYSE:ONLN) and Global X E-Commerce ETF (NASDAQ:EBIZ).
Price Action: BABA shares traded lower by 0.92% at $71.35 premarket on the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Wikimedia Commons
