Alibaba Group saw its shares increase roughly 2% on Wednesday after a report indicated the company is engaged in talks to invest in artificial intelligence startup DeepSeek. The report said both Alibaba and Tencent Holdings are in discussions to participate in a funding round that values DeepSeek at more than $20 billion.
According to people familiar with the matter cited in the report, DeepSeek has only just started raising capital for the first time. The AI company is owned by Chinese hedge fund High-Flyer Capital Management, and the current discussions involve potential investment from two of Chinas largest technology groups.
Initial fundraising targets for DeepSeek, as reported previously, called for at least $300 million at a valuation of at least $10 billion. Those targets have since been revised upward to a valuation exceeding $20 billion, a move attributed in the report to strong interest from investors.
Sources also cautioned that the conversations are ongoing. Both the ultimate valuation for DeepSeek and the total amount raised remain subject to change as negotiations proceed. The report did not provide a finalized deal or confirm whether either Alibaba or Tencent will complete investments.
This sequence of developments appears to have been sufficient to prompt a positive near-term market reaction for Alibaba shares. Beyond the immediate stock move, the story centers on early-stage fundraising dynamics for an AI firm that has attracted notable investor attention and on the role of major technology companies as potential backers.
Summary
- Alibaba shares rose 2% after reports of investment talks in AI startup DeepSeek.
- Both Alibaba and Tencent are reportedly in discussions to invest at a valuation above $20 billion.
- DeepSeek, which is owned by High-Flyer Capital Management, has started fundraising for the first time and initially sought at least $300 million at a $10 billion valuation.
Key points
- Market reaction: Alibaba stock registered a roughly 2% uptick following the report - a near-term move in equities.
- Fundraising scale and valuation: DeepSeeks initial target of $300 million at a $10 billion valuation has reportedly shifted to an above $20 billion valuation amid strong investor interest.
- Sectors affected: Technology and venture capital activity in AI are central to the report, with potential spillovers to Chinese tech equities.
Risks and uncertainties
- Talks are ongoing - there is no certainty that Alibaba or Tencent will complete an investment.
- Both the reported valuation and the size of any fundraising remain subject to change as negotiations continue.
- Information about the final terms and participants is not confirmed, leaving outcomes uncertain for investors and market observers.