Alibaba's Stock has been in a malaise but a series of new artificial-intelligence initiatives were helping early Tuesday. However the Chinese company still looks to be lagging behind the top American AI companies.

Alibaba's American depositary receipts were up 3.3% in the premarket after it announced its most powerful AI chip and its largest AI model simultaneously on Tuesday. The ADRs have fallen 21% this year so far coming into Tuesday's session.

The Zhenwu V900 AI chip performs three times better than its predecessor-which Alibaba released just four months ago-the company said. It also launched its Qen3.8-Max model, which it said was the most powerful of its flagship AI releases so far.

"We anticipate... significant growth in annual AI chip shipment volumes," Alibaba CEO Eddie Wu said in a speech at the company's annual cloud-computing event. "Global shortages across the AI data center supply chain are currently limiting the speed at which we can scale our compute infrastructure."

Wu said Alibaba will work with its partners to overcome those challenges and that Alibaba Cloud was aiming for more than 20 gigawatts of global data-center capacity by 2032.

That all sounds good but still leaves Alibaba well behind U.S. peers. Its latest chip is only competitive with Nvidia's Hopper hardware, which is now two generations old. And in terms of data-center capacity, Elon Musk's SpaceX has said it intends to have sufficient power and cooling to support 20 GW of computing capacity by the end of next year.

"China's AI infrastructure story is...different from the US. It is less demand-constrained and more supply-constrained because AI has become a strategic priority," said Counterpoint Research senior analyst Parv Sharma. "Alibaba's 20GW by 2032 sounds massive, until you remember each U.S. hyperscaler is already operating at a multi-GW scale."

Alibaba investors will be watching this week to see if talks between President Donald Trump and China's leader Xi Jinping result in any deal on AI. But unless the company's access to cutting-edge chips is unlocked-which seems unlikely-Chinese AI will struggle to catch up with the U.S.