Alibaba's New AI Chip Sparks Nvidia Dip, But Ross Gerber Calls It 'Laughable' Posturing To Still Secure Blackwell Sales
Alibaba is developing a new AI chip to reduce reliance on Nvidia amid U.S. export restrictions. Despite this, investor Ross Gerber criticized the move as 'laughable,' suggesting it is merely a negotiating tactic. Nvidia's stock fell 3.32% as competition from Chinese firms increases. Gerber emphasized that China still needs U.S. technology, as they lack the capability to produce advanced chips independently. Nvidia's recent earnings report showed significant revenue growth, highlighting the global dependence on its technology.
Alibaba Group Holding Ltd. BABA is reportedly working on a new artificial intelligence chip aimed at reducing China's reliance on U.S. semiconductor giant Nvidia Corp. NVDA, but prominent investor Ross Gerber dismissed the move as "laughable."
Alibaba Develops AI Chip To Counter US Restrictions
On Friday, the Wall Street Journal reported that Alibaba's latest processor, currently in testing, is designed for AI inference tasks and built to be compatible with Nvidia's widely used software ecosystem.
The development underscores Beijing's efforts to accelerate domestic semiconductor innovation amid tightening U.S. export controls.
Alibaba's chip debut follows Washington's restrictions on advanced chip exports, which have limited Nvidia to selling its H20 processor in China.
While President Donald Trump approved shipments in July, Beijing swiftly discouraged purchases over security risks, intensifying pressure on Chinese firms to adopt homegrown solutions.
Nvidia Stock Slips As China Chip Race Intensifies
Shares of Nvidia dropped 3.32% Friday and declined another 0.29% in after-hours trading, according to Benzinga Pro.
The sell-off comes as Chinese companies, including Huawei Technologies, Cambricon, and startup MetaX, ramp up domestic chip offerings. Now, Alibaba has also joined the list.
Nvidia has reportedly also paused development of its China-focused H20 chip after Beijing regulators reportedly urged tech giants like Tencent Holdings TCEHY and ByteDance to shift to local alternatives.
Gerber: China Still Needs US Chips
Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, downplayed Alibaba's move, calling it a negotiating tactic.
"This is laughable," Gerber wrote on X, formerly Twitter. "The Chinese can't even get the machines that make the good chips. This is posturing so they can get Nvidia Blackwell chips… better they use US technology than work on their own. US will get a cut of sales."
Nvidia Earnings Highlight Global Dependence
Nvidia reported second-quarter revenue of $46.74 billion, up 56% year-over-year, beating Wall Street expectations. Adjusted EPS reached $1.05, while gross margins stood at 72.7%. The chipmaker guided for third-quarter revenue between $52.92 billion and $55.08 billion, excluding any H20 shipments to China.
Benzinga’s Edge Stock Rankings show NVDA sustaining a strong upward trend across short, medium and long-term periods. More detailed performance insights are available here.
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