Alibaba’s New AI Model Runs 8x Faster While Sentiment Hits 60.6

Over the past week, shares of Alibaba (NYSE:BABA | BABA Price Prediction) fell 4.46%, coinciding with a shift in retail investor sentiment. Discussion around the stock remains elevated on Reddit and X, with sentiment improving from neutral in January 2026 to a bullish 60.6 in recent weeks. Attention centers on Alibaba’s aggressive AI push, particularly the February 16th launch of its upgraded Qwen3.5 AI model, three days before the company reports Q2 FY2026 earnings on February 19th.

Qwen3.5 Positions Alibaba as Software Threat

Alibaba’s latest AI model, Qwen3.5, represents a significant competitive escalation as it is 60% cheaper and runs workloads eight times faster than its predecessor, while outperforming rivals such as GPT-5.2, Claude Opus 4.5, and Gemini 3 Pro in benchmark testing. The model features enhanced “agentic capabilities,” meaning it can independently execute complex, multistep tasks across mobile and desktop applications. This positions Alibaba as a cost-effective alternative in the AI arms race, potentially threatening traditional software companies that rely on premium pricing.

For BABA, the news has meant that retail investors are taking notice as mentions of BABA on Reddit’s r/WallStreetBets and r/stocks have increased, with users sharing bullish commentary around the company’s AI momentum. One highly-engaged post on r/WallStreetBets discussing the Qwen AI app noted: “Qwen AI app rival to ChatGPT” (368 upvotes, 102 comments), while another on r/stocks highlighted: “China Tells Alibaba, Tech Firms to Prep Nvidia H200 Orders” (178 upvotes, 40 comments). The conversation reflects three key themes:

Qwen AI app rival to ChatGPT
byu/[username] inwallstreetbets

China Tells Alibaba, Tech Firms to Prep Nvidia H200 Orders
byu/[username] instocks

• DeepSeek AI model momentum has validated Chinese tech’s ability to compete globally in AI
• China’s government is directing Nvidia H200 chip orders to Alibaba and other tech firms, signaling state support
• Qwen AI app hit 10 million downloads in its first week, demonstrating rapid user adoption

Despite the positive news around QWEN, analysts are closely watching the February 19 Q3 2026 earnings report. CEO Eddie Wu acknowledged the company has “entered into an investment phase to build long-term strategic value in AI technologies,” warning that near-term profitability would fluctuate due to heavy AI investments.

Wall Street Stays Bullish Despite Volatility

Analyst sentiment remains decidedly positive heading into earnings. 14 analysts rate the stock as “Strong Buy,” with a 12-month price target of $188.69 representing 21% upside. Both Morgan Stanley (NYSE:MS) (Overweight, $180 target) and Jefferies (Buy, $225 target) remain positive, with Jefferies expecting Alibaba’s Cloud business to capture the majority of incremental industry AI cloud revenue in 2026.

The stock has gained over 32% over the past year, substantially outperforming the S&P 500 (NYSEARCA:SPY), which has only gained ~11%%. With earnings days away, investors are watching whether Alibaba’s AI investments can translate into sustainable growth or if the profitability trade-off will extend the company’s recent losing streak.