A fierce price war is brewing in China’s cloud computing market. Chinese tech giants Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU) have slashed prices on their large-language models (LLMs) for generative AI products. Alibaba’s cloud unit announced cuts of up to 97% on its Tongyi Qwen LLMs, with the Qwen-Long model now priced at 0.0005 yuan per 1,000 tokens, down from 0.02 yuan. This represents the cost per unit of data processed by the LLM.
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Baidu also announced that its Ernie Speed and Ernie Lite models would be free for all business users. Previously, Baidu’s Ernie Lite and Ernie Speed, released in March, required corporate customers to pay. Additionally, the company was the first in China to offer LLM products to consumers, charging 59 yuan per month for the advanced Ernie 4 model.
China’s cloud computing price war has seen recent price cuts from Alibaba and Tencent (OTC:TCEHY). With the rise of AI, Chinese cloud vendors have boosted sales by offering AI chatbot services powered by these LLMs.
Is BABA a Buy or Hold?
Analysts remain bullish about BABA stock, with a Strong Buy consensus rating based on 13 Buys and three Holds. Year-to-date, BABA has increased by more than 10%, and the average BABA price target of $103.99 implies an upside potential of 20.6% from current levels.
