Alibaba, Chinese Tech Firms Slash AI Model Prices To Win Developers
Alibaba and other Chinese tech firms have significantly reduced the prices of AI coding models to attract developers, offering prices as low as one-fifth of their international competitors. This strategy aims to build long-term loyalty and market dominance. Alibaba Cloud's recent model launch included a 50% discount, while other firms have also lowered prices to enhance product adoption. Despite a year-to-date stock gain of 43%, Alibaba's shares are currently trading down by 1.05%.
Alibaba Group BABA stock is trading lower on Friday amid reports indicating the e-commerce juggernaut and other major Chinese tech firms have slashed the prices of AI coding models to roughly one-fifth of what leading international rivals charge.
The companies aim to trade short-term profits for long-term developer loyalty and market dominance, YiCai reported on Friday, citing industry experts. On July 23, Alibaba Cloud launched its Qwen3-Coder model and immediately offered a 50% discount.
Earlier, Moonshot AI’s July 11 release of the Kimi K2 model, known for its coding and agent capabilities, helped drive Chinese pricing down to about 4 Chinese yuan ($0.55) per million input tokens and 16 Chinese yuan ($2.23) for output, roughly 20% of the cost of Anthropic’s Claude 4.
Also Read: Alibaba, Huawei Dominate China’s Growing Cloud Market
Chinese firms are strategically using price cuts to rapidly attract developers, encourage product adoption, build usage habits, and collect user feedback to refine their offerings, YiCai cited Charlie Dai, VP and chief analyst at Forrester.
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Chen Xin, who oversees Alibaba Cloud’s coding tool Tongyi Lingma, said current paid-user penetration stands at 10–20%, with typical efficiency gains of 10–30%. However, he expects that to rise to 50–60% within six months and potentially reach 80% in a year as both domestic and global models mature.
Alibaba stock has gained 43% year-to-date, topping the NYSE Composite Index’s (of which Alibaba is also a constituent) over 9% returns.
Price Action: BABA shares are trading lower by 1.05% to $119.88 premarket at last check Friday.
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