Alibaba Downgraded to Hold as It Unveils Cost-Efficient Qwen 3.5 AI Model
An analyst firm downgraded Alibaba from Buy to Hold on February 18, citing falling operating margins and a rise in long-term debt. On February 16, Alibaba launched the Qwen 3.5 AI model with 397 billion parameters, 60% lower usage costs and eightfold workload processing improvements.
1. Analyst Downgrade
An analyst firm lowered Alibaba’s rating from Buy to Hold on February 18, citing a decline in operating margins and a significant rise in long-term debt, warning that profit pressures may limit the stock’s upside in the medium term.
2. Qwen 3.5 Launch
On February 16, Alibaba introduced the Qwen 3.5 AI model featuring 397 billion parameters, 60% lower usage costs and eightfold improvement in large-workload processing, along with new coding and agentic capabilities and compatibility with open-source AI agents.
3. Strategic Implications
Alibaba aims to monetize its AI offerings through cloud services and proprietary chip development, but analysts expect the stock to trade sideways as near-term financial pressures offset potential long-term gains from its AI investments.