Shares of Chinese giants Alibaba and Baidu have soared. They impose competition to Nvidia

Quotes of Chinese technology giants Alibaba and Baidu rose sharply at trading in Hong Kong. The market reacted enthusiastically to reports that both corporations are actively replacing expensive and hard-to-get Nvidia gas pedals for artificial intelligence with chips of their own design.

Alibaba shares jumped more than 7% in Hong Kong trading on September 12, hitting their highest since November 2021. The surge followed an 8% rise in U.S. trading that ended Sept. 11. The growth of securities in Hong Kong was the best for Alibaba in two weeks, Bloomberg noted.

In parallel, the securities of search engine Baidu rose at the moment by almost 13% and reached the highest since January 2024.

The jump in quotes follows a publication in The Information that Alibaba and Baidu have started using their own chips for training artificial intelligence, replacing scarce and expensive Nvidia gas pedals. Alibaba has been using its own chips to train small AI models since early 2025, while Baidu is experimenting with training new versions of its Ernie model on a Kunlun P800 chip, the publication reported, citing four sources.

"Alibaba's recent actions have completely shifted investor focus to its AI potential, leveling fears of a price war in the food delivery segment," Bloomberg quoted Paul Pong, managing director at Pegasus Fund Managers, as saying. - Given its ability to develop its own chips, this could create new growth drivers."

This week, Alibaba raised $3.2 billion through a convertible bond offering - the funds will be used to develop the country's largest AI infrastructure and cloud services. The company also unveiled updates to its flagship Qwen line of AI models, which are positioned as competitors to chatbots from DeepSeek and OpenAI.

"Recent releases of AI models from Alibaba, including the more efficient Qwen3-Next and Qwen3-Max-Preview with a trillion parameters, should support demand for its cloud services. However, profitability in this segment is likely to remain weak given low margins and disproportionately high capital expenditures," warned Bloomberg analysts Robert Lee and Jasmine Liu. Tencent, another Chinese IT giant, is still "better positioned to capitalize on AI revenue in the short term," they said.

Nvidia's H20 chip - the most powerful chip the U.S. allows to be shipped to China - still outperforms its Chinese counterparts, Reuters notes. However, the chip from Alibaba is already efficient enough to compete with the H20, three employees who have worked with the Chinese design told The Information. An Nvidia spokesperson acknowledged that "competition has certainly begun," Reuters reports.

In late August, Nvidia CEO Jensen Huang acknowledged that negotiations with the White House to allow shipments of a simplified version of the next-generation chips to China would take time. The company struck a deal with U.S. President Donald Trump to obtain export licenses in exchange for 15% of the proceeds from H20 chip sales in China.

Alibaba's papers in Hong Kong since the beginning of 2025 have risen by 84%, Baidu - by 40%. Despite the increased price, most stock analysts continue to consider them attractive. According to FactSet, the consensus rating for Alibaba 's securities is Buy, while Baidu's securities are Overweight, which is also an advice to buy.

This article was AI-translated and verified by a human editor