Alibaba Challenges Nvidia with New AI Chip, Securing Top Analyst Pick

Edgen Stock

·Feb 25 2026, 10:17

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Key Takeaways

A new report from China Merchants Securities International (CMSI) highlights Alibaba's comprehensive AI strategy, centered on its proprietary technology stack. The development of a high-end AI chip positions the company to reduce costs and challenge established market leaders.

Alibaba has built a full-stack AI ecosystem spanning its Qwen model, Alibaba Cloud infrastructure, and Pingtouge chip division.
The company's new Zhenwu 810E chip directly benchmarks against Nvidia's H20, signaling a push for greater self-sufficiency in high-performance computing.
CMSI reaffirmed its 'Overweight' rating and HK$198 price target on Alibaba, maintaining it as a top pick in China's internet sector.

Alibaba's Zhenwu 810E Chip Challenges Nvidia's H20

Alibaba is advancing a "full-stack" artificial intelligence strategy, integrating its proprietary technology from infrastructure to applications, according to a research note from China Merchants Securities International (CMSI). The strategy rests on three core pillars: the Qwen large language model, the Alibaba Cloud platform, and the Pingtouge semiconductor division. A key development is Pingtouge's launch of the Zhenwu 810E, a high-end AI chip designed to directly compete with Nvidia's H20 chip. This move underscores Alibaba's ambition to build an autonomous and controllable computing power infrastructure.

CMSI Endorses Strategy with HK$198 Price Target

The brokerage firm maintained its "Overweight" rating on Alibaba's stock (BABA-W) and reiterated its status as a top pick within China's internet sector. CMSI set a price target of HK$198 for its Hong Kong-listed shares and US$204 for its U.S. listing. The analysts' confidence stems from the strategic advantage of developing models on self-developed chips, which is expected to significantly reduce unit costs through better model optimization and improved resource utilization. This vertical integration is seen as a critical factor in strengthening Alibaba's competitive position in the cloud and AI markets.