Citigroup has published a research note highlighting that Alibaba-W (ASX: 09988) released a preview of its flagship model, Qwen (Tongyi Qianwen) 3.8 Max, on July 19th. The model boasts 2.4 trillion parameters and is set to be open-sourced shortly.

The firm maintains a "Buy" rating on Alibaba with a target price of HK$191.

Citigroup's analysis suggests competition in China's AI sector is intensifying, with companies rapidly surpassing one another. This fast-paced iteration is fostering a "model-agnostic" environment where businesses adopt multi-model strategies to select the best performance for the price.

This trend erodes the defensive moats of individual models, shifting the competitive focus towards platforms and infrastructure capable of seamless hosting and management.

Companies with full-stack capabilities—spanning from chips and cloud infrastructure to models and applications, like Alibaba—are positioned to gain a stronger competitive edge.

The note also posits that the market may be undervaluing the real-world AI applications of Tencent Holdings Ltd (ASX: 00700), such as the value of WorkBuddy, which has recently shown promising market traction.