Chinese AI startup DeepSeek is considering outside funding for the first time, which has drawn interest from Chinese tech giant Alibaba (BABA) and state funds, according to a report by The Information. This development comes after DeepSeek shocked the tech industry in January with its low-cost AI models that can match or outperform Western rivals, such as Microsoft-backed OpenAI (MSFT).
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As a result, DeepSeek has seen its growth surge, which has caused outages and increased its need for more AI chips and servers to handle the increasing demand. In addition, the firm is shifting its focus to building a revenue-generating business. Therefore, DeepSeek is looking for outside funding to scale up its operations, and Chinese state funds, including China Investment Corp and the National Social Security Fund, are interested in investing in DeepSeek.
It is also worth noting that DeepSeek’s founder, Liang Wenfeng, recently met with Chinese President Xi Jinping to discuss ways to advance the country’s technological capabilities and grow its economy. There is no doubt that the Chinese government, along with Alibaba, will want to invest heavily in AI in order to challenge the U.S.’ current dominance in the field.
Is BABA Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on eight Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 77% rally in its share price over the past year, the average BABA price target of $128.67 per share implies 1.5% upside potential.
