Why Alibaba Stock Inched Higher Today
Key Points
A major social media company is making a concentrated push into for-profit AI, according to a media report.
It's reportedly utilizing several third-party models, such as Alibaba's, to aid in training its system.
Following news that it is reportedly involved in a significant artificial intelligence (AI) initiative by a major U.S. tech company, Alibaba Group (NYSE: BABA) stock closed higher on Wednesday. Investors pushed the shares almost 2% skyward, a rate that beat the 0.7% gain of the benchmark S&P 500 index.
A new AI initiative
Before market open that day, Bloomberg reported that social media titan Meta Platforms is making a concentrated effort to develop a proprietary, for-pay AI model.
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Citing unnamed "people familiar with the matter," the financial news agency wrote that Meta aims to debut such a model, currently code-named Avocado, next spring. This would mark a departure from the company's strategy of open-source AI.
The group developing Avocado, which Bloomberg reported has been named TBD, is utilizing a set of third-party AI models to assist in training the Meta system. Among these are Alibaba's Qwen, Gemma from Alphabet unit Google, and OpenAI's gpt-oss.
Neither Meta nor Alibaba officials have commented on the article yet.
Revolutionary success
Alibaba's apparent contribution to Avocado is meaningful not for the relatively modest revenue it might bring to the company, but because it bolsters Qwen as a powerful and useful tool for AI developers. This enhancement to reputation can only benefit Alibaba as its maker, and keep the world aware that the Chinese company is a player in the AI revolution.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.