TLDRs:
- Alibaba unveils Qwen 3.5, boasting lower costs and stronger AI capabilities.
- New model features visual agentic functions across apps and platforms.
- Price cuts reflect China’s intensifying AI and cloud infrastructure race.
- Qwen 3.5 gains international attention, beating rivals on regional benchmarks.
Alibaba (BABA) has officially launched its latest AI model, Qwen 3.5, designed to carry out autonomous tasks more efficiently than previous iterations.
According to the company, the model operates 60% cheaper than its predecessor while handling workloads up to eight times larger. The announcement positions Alibaba at the forefront of China’s growing AI sector, where competition is intensifying among major tech players.
A key highlight of Qwen 3.5 is its “visual agentic capabilities”, enabling the AI to interact seamlessly across both mobile and desktop applications. This functionality is aimed at attracting more users to Alibaba’s Qwen chatbot app, where the company seeks to strengthen its foothold against domestic competitors such as ByteDance’s Doubao and DeepSeek.
Alibaba Group Holding Limited, BABA
Benchmark Tests Show Strong Advantage
Independent benchmark assessments reveal that Qwen 3.5 outperforms several rivals, including GPT-5.2, Claude Opus 4.5, and Gemini 3 Pro. While DeepSeek is expected to release its next-generation AI model soon, Alibaba’s offering demonstrates the company’s ability to maintain a competitive edge through both performance and affordability.
The enhancements in Qwen 3.5 reflect Alibaba’s strategy of focusing on high-performance, cost-efficient AI, allowing the company to scale services while keeping operational costs lower. Investors and industry observers are closely watching how these innovations translate into adoption rates for the Qwen chatbot and related enterprise solutions.
Price Strategy Reflects AI Infrastructure Push
The 60% reduction in operational costs for Qwen 3.5 is part of a broader effort by Alibaba to capture market share in China’s fiercely competitive AI space. In late 2025, the company also lowered prices on its Qwen3-Max model by nearly 50% domestically to match moves by competitors, including start-ups like Moonshot AI.
This pricing strategy is supported by a three-year capital investment of at least 380 billion yuan (US$53 billion) in AI and cloud infrastructure. While the company’s profits were down 52% year-on-year in the latest quarter, cloud revenue rose 34%, signaling that Alibaba is prioritizing long-term growth and infrastructure build-out over immediate earnings.
Global Expansion and Regional Benchmarks
Beyond China, Alibaba is positioning Qwen 3.5 for international adoption. Notably, AI Singapore selected the Qwen model to power its national AI program, moving away from alternatives developed by Meta and Google. Analysts note that the decision favored Qwen’s stronger performance in Southeast Asian languages, rather than just cost.
Benchmark testing shows a 32-billion-parameter Qwen model outperforming a 70-billion-parameter Meta model on regional tests. This highlights how localized AI optimization can give Alibaba a competitive edge internationally. Open-source uptake is also expected to create a feedback loop that increases demand for Alibaba’s paid cloud services, effectively turning AI adoption into infrastructure revenue.
Alibaba’s launch of Qwen 3.5 underscores the company’s ambition to dominate both domestic and international AI markets. While profitability has been temporarily affected, the combination of advanced capabilities, cost efficiency, and strategic international partnerships positions Alibaba as a key player in the next phase of the AI and cloud computing arms race.
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