Alibaba unveils the Zhenwu M890 AI chip, a threefold leap in performance over the 810E, designed to power heavy AI workloads with 144GB of GPU memory and 800GB/s interchip bandwidth, as part of its domestic AI processor push amid U.S. export restrictions.

Alongside the M890 launch, Alibaba commits to substantial investment in its in-house AI ecosystem, including more than 380 billion yuan (about $53 billion) over three years for cloud computing and AI infrastructure.

The M890 was officially introduced on May 19, 2026, with claims of tripling performance, large memory capacity, and ultra-high interconnect speeds to support long-context, multi-model AI agent workloads.

Analysts expect profitability to stay under pressure through 2026, with a possible rebound in 2027 if cloud monetization improves and spending becomes more efficient.

Market optimism is evident as 41 S&P Global analysts rate Alibaba stock a Strong Buy, with an average 12-month target around $190.69, about 40% above current levels.

The positive sentiment was echoed by major firms like Morgan Stanley and Bank of America, which have favorable notes and optimistic price targets.

In the March quarter, Alibaba posted an operating loss of roughly $125 million as capex rose and profitability stayed pressured by AI infrastructure and quick-commerce investments, even as cloud momentum shows growth.

Cloud Intelligence Group revenue rose about 38% year over year to $6.1 billion, with external cloud revenue growing around 40% and AI-related product revenue triple-digit for the 11th straight quarter.

Alibaba has delivered about 560,000 Zhenwu units to more than 400 customers across 20 industries, signaling significant commercial traction for its AI hardware.

Qwen 3.7-Max, optimized for advanced coding and long-running AI agents, enables continuous operation up to 35 hours, reinforcing Alibaba’s broader AI model strategy.

The M890 targets AI agent workloads with strong long-context retention and real-time coordination between models, delivering nearly three times the performance of the 810E.

Alibaba outlines a multi-year chip roadmap, with the V900 planned for 2027 and the J900 for 2028, each expected to deliver roughly threefold performance improvements.