Alibaba Unveils Qwen3.5 with 60% Cost Cuts and Backs $700M AI Funding Round
Alibaba released Qwen3.5-397B-A17B, boasting multimodal text, image and video processing, performance on par with 1T-parameter models and up to 60% lower deployment costs. The company co-led Moonshot’s funding round, contributing to over $700M committed as Moonshot eyes a $10B valuation, even as Appaloosa cut its Alibaba holding by 20.3%.
1. Qwen3.5 Launch
Alibaba introduced Qwen3.5-397B-A17B, also called Qwen3.5-Plus, designed for the agentic era with multimodal capabilities across text, images and video. The open-source model delivers performance comparable to a 1T-parameter system while reducing deployment costs by up to 60% and is positioned as enterprise-ready for reasoning, coding and agentic workflows.
2. Moonshot Funding Round
Alibaba joined Tencent and 5Y Capital to back Moonshot’s latest funding tranche, with over $700M committed toward a targeted $10B valuation following a $500M raise at a $4.3B valuation. Moonshot’s Kimi K2.5 model has seen rapid user growth and the launch of a cloud service for its OpenClaw agent aims to deepen platform engagement.
3. Appaloosa Stake Reduction
Appaloosa Management trimmed its Alibaba stake by more than 1.3M shares, a 20.3% reduction that lowered its portfolio weighting from 15.61% to 10.88%. This shift reflects a tactical repositioning by the hedge fund and may signal changing investor sentiment toward Alibaba’s near-term outlook.