Alibaba Group Holding (NYSE: BABA) is moving deeper into the artificial intelligence race with the development of a new homegrown chip. The chips are reportedly designed for a wide range of AI inference tasks, according to a Wall Street Journal report. The new processor for the chips which is now undergoing testing, is manufactured by a domestic Chinese company.
This is a departure from earlier Alibaba AI chips, which were fabricated by Taiwan Semiconductor Manufacturing (TSMC). The shift highlights Beijing’s push for technological self-sufficiency. The move comes as US export restrictions continue to limit China’s access to advanced Nvidia processors.
The Biden and Trump administrations have both tightened controls on Nvidia’s high-end AI chips sold in China. Nvidia’s H20 chip, the most advanced model was briefly allowed back on the Chinese market last month, giving hope to manufacturers like Alibaba. However, the H20 chip production was halted recently. As a result, Chinese companies such as Alibaba and ByteDance have faced pressure to spur investment in domestic solutions.
Alibaba shares closed on August 28, 2025 at $119.57, down 2.18%. However, the stock rebounded strongly in pre-market trading on August 29, 2025 on the news of Alibaba AI chips development, rising 3.44% to $123.68.
Alibaba stock today is trading within a 52-week range of $80.06 to $148.43 on Nasdaq. Adding to investor optimism, the Jack Ma led company reported a 26% year-over-year revenue jump in its cloud computing division for the April-June quarter, exceeding analyst expectations.
Alibaba share price chart on TradingView at press time is as follows:
For investors, Alibaba’s dual push in AI and cloud computing could provide long-term growth momentum. However, geopolitical risks, ongoing US-China trade tensions, and high competitive in both cloud and AI sectors remain factors to watch. With shares trading below their 52-week high, the market’s reaction in the coming weeks will likely hinge on how quickly Alibaba can commercialize its new chip.
Also Read: NVIDIA Stock Dips 1.15% as China Pushback Halts H20 AI Chip Production