Alibaba is backing Moonshot AI with 20,000 NVIDIA chips as part of intensifying competition in Chinese AI model development.
Chinese artificial intelligence startup Moonshot AI has reached a computing power agreement with e-commerce giant Alibaba that would grant it access to a cluster of approximately 20,000 Nvidia Hopper-architecture chips to support training of its Kimi series models. The news sent Alibaba's Hong Kong-listed shares surging as much as 7% in early trading on August 3, with gains still at 6.24% at the time of reporting. The stock traded at HK$124.3 (approximately $15.85) with trading volume reaching HK$9.06 billion (approximately $1.2 billion).
According to reports citing sources familiar with the matter, the two companies have reached an agreement allowing Moonshot AI to utilize the computing cluster to train and run the Kimi series models. An Alibaba spokesperson denied claims that the company supplied H200 chips, calling the suggestion "completely unfounded," but did not deny providing Nvidia computing power overall and declined to disclose the actual chip models used.
Moonshot AI recently completed a Series F funding round of more than $3.5 billion at a valuation of $35 billion. Alibaba, as the largest internet-company investor, has participated in every funding round since the Series B+, investing a cumulative $800 million. Based on the latest valuation, Alibaba's stake is worth approximately $5 billion, representing a paper profit of $4.2 billion. The startup's valuation has grown nearly 14-fold since Alibaba led a $2.5 billion round in early 2024. The latest round was led by China's National Artificial Intelligence Industry Investment Fund, which is also an official investor in DeepSeek. Moonshot AI is reportedly in talks for a final pre-IPO funding round targeting a pre-money valuation of up to $50 billion.
Moonshot AI released its open-source model Kimi K3 in July with 2.8 trillion parameters, with some benchmark tests showing it approaching the advanced models of OpenAI and Anthropic. Alibaba is not only a major investor but also provides substantial computing resources through its cloud infrastructure, extending the relationship from equity investment to encompass model training, chip access, and cloud computing collaboration. The arrangement typically encourages invested AI companies to use Alibaba's cloud services, though Moonshot AI's strong performance could deepen competition with Alibaba's in-house Qwen models.
A computing cluster of 20,000 Nvidia chips underscores how artificial intelligence model competition has extended beyond algorithmic capability to chip acquisition and data center scale. While the US continues to restrict exports of advanced AI chips to China, Chinese model performance continues to close the gap rapidly—a pattern reflecting how cloud providers' existing chip inventories, cross-border computing capacity, and centralized resource scheduling may weaken the effectiveness of export controls. For Alibaba, providing computing power to Moonshot AI improves cloud service utilization and strengthens its strategic position in China's AI ecosystem.
With ample computing power secured, Moonshot AI's subsequent iterations of Kimi K3 are expected to accelerate, further challenging top US models. The partnership exemplifies how China's AI industry, despite chip restrictions, maintains competitiveness through resource scheduling and ecosystem collaboration among leading companies.