Alibaba bets on chips

Alibaba Bets Big on AI Chips and Cloud Growth

Alibaba is doubling down on its cloud computing ambitions and developing a new AI chip to power next-gen infrastructure. Its cloud division revenue grew 26% year-over-year in the June quarter, outpacing previous quarters and marking a bright spot for the tech giant.

The chip details: Alibaba’s latest chip is designed for inference workloads, where models create predictions or generate answers in real time. The chip will reportedly be compatible with Nvidia software and manufactured using a 7 nanometer process.

Investor reactions: Shares surged nearly 19% in Hong Kong trading after Alibaba’s earnings release, building on a 13% gain in New York the week prior. While overall revenue rose just 2% year-over-year to $34.7 billion, investors are buying into Alibaba’s AI-fueled future—particularly as the company leans into its cloud unit and chip innovation.

Meta’s $14B Scale AI Deal Shows Early Cracks

Meta’s partnership with Scale AI, once touted as a cornerstone of its superintelligence ambitions, is looking shaky. Just two months after investing $14.3 billion and bringing Scale CEO Alexandr Wang and top executives on board, Meta is diversifying its data labeling vendors and leaning on competitors like Mercor and Surge.

How they got here: In June, Meta poured billions into Scale to secure high-quality labeled data—the lifeblood of large AI models—and lure talent to its newly formed Meta Superintelligence Labs (MSL). Wang was tapped to lead the effort, and several Scale execs followed.

What’s driving the tension: Inside MSL, researchers reportedly view Scale’s data as lower quality compared to competitors, preferring to work with Surge and Mercor. Newcomers are frustrated navigating Meta’s bureaucracy (one Scale executive left Meta after two months), while longtime GenAI staff see their roles diminished.

China Calls for AI Cooperation on a Global Stage

At the Shanghai Cooperation Organization (SCO) Summit, Chinese President Xi Jinping urged member nations to deepen collaboration on AI while rejecting a “Cold War mentality” in tech. Speaking to more than 20 world leaders, including Russia’s Vladimir Putin and India’s Narendra Modi, Xi pitched AI as a shared opportunity rather than a zero-sum race.

“Global governance has come to a new crossroads,” Xi said. “The house rules of a few countries should not be imposed upon others.”

What’s driving this: China is positioning itself as a global AI convener, investing $84 billion across SCO nations and launching initiatives in new energy, digital economy, and tech innovation. The summit also highlighted China’s warming ties with India, signaling a potential realignment of alliances as AI infrastructure becomes increasingly strategic.

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