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ChangXin Memory Technologies (CXMT) and Zhipu AI have not only seen their share prices skyrocket, but they have also handed a windfall to their common backer: Alibaba Group Holding.
Before the listing of China’s memory-chip giant on Monday, Alibaba owned nearly 5 per cent of CXMT, making it the chipmaker’s largest industrial shareholder, according to the prospectus.
Alibaba has invested about 7.6 billion yuan in CXMT since 2021. Based on Tuesday’s closing market capitalisation of about 3.14 trillion yuan (US$464 billion), Alibaba’s stake was worth more than 140 billion yuan – nearly 20 times its reported investment.
These paper gains contrasted sharply with Alibaba’s previous high-profile investment. After acquiring a controlling stake in hypermarket operator Sun Art Retail in October 2020 for HK$28 billion (US$3.6 billion) – doubling its effective stake – it ended up with more than 25 billion yuan in impairment and disposal losses. Alibaba sold its entire stake in the company to Chinese private-equity firm DCP Capital for HK$13.1 billion on December 31, 2024.
As Alibaba refocuses on e-commerce and pivots towards artificial intelligence, it’s moved away from control acquisitions aimed at expanding a sprawling consumer-internet empire. Instead, it has shifted towards minority stakes and industrial partnerships across the AI supply chain.
In 2023, company chairman Joe Tsai laid out four capital-management priorities: improving returns from operating businesses, investing cash flow in future growth, monetising noncore assets, and returning capital to shareholders.Alibaba has also been one of the earliest and fastest-moving investors in China’s domestic model developers. As a wave of AI model start-ups emerged in 2023 and 2024, it backed Zhipu AI, (known as Z.ai overseas), Moonshot AI and MiniMax, as well as Baichuan AI and 01.AI, although the latter two have since shifted away from their foundational AI models.
Alibaba also invested about US$800 million in Moonshot, the developer of the Kimi models, for a stake of around 36 per cent, according to its fiscal 2024 filings. It joined several subsequent funding rounds, though the size of those follow-on investments was not disclosed.
Moonshot is now reportedly preparing for another pre-IPO financing round with a target valuation of as much as US$50 billion.Over the past two years, Alibaba has expanded further into multimodal and embodied AI. Its portfolio includes AI video developers PixVerse and Vidu, as well as Kuaishou’s Kling AI.Kling completed its first external fundraising in July. Alibaba invested about US$1.36 billion for a 1.11 per cent stake, according to a Kuaishou filing.
In the chip and AI infrastructure sectors, CXMT was not Alibaba’s only bet this year. The company is a cornerstone investor in the Hong Kong listings of memory-interconnect chip designer Montage Technology and photonic computing and optical-interconnect company Lightelligence.
It has also committed capital to Zhongji Innolight, a major supplier of high-speed optical modules, whose coming Hong Kong listing could become the city’s biggest in seven years.The stakes may be relatively small, but these companies supply critical data-centre components. These investments also give Alibaba exposure to key parts of the AI infrastructure stack as it seeks to position itself as what it calls a full-stack AI provider.
Meanwhile, Alibaba’s robotics portfolio is broader and generally earlier-stage. It includes robot developers such as LimX Dynamics, Robot Era, Unitree, Galaxea and X Square Robot; dexterous-hand maker LinkerBot; and embodied-model developers including Sudo Technology and Noematrix.