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Alibaba Group Holding Ltd. (NYSE:BABA) is reportedly working on a new artificial intelligence chip aimed at reducing China's reliance on U.S. semiconductor giant Nvidia Corp. (NASDAQ:NVDA), but prominent investor Ross Gerber dismissed the move as "laughable."
On Friday, the Wall Street Journal reported that Alibaba's latest processor, currently in testing, is designed for AI inference tasks and built to be compatible with Nvidia's widely used software ecosystem.
The development underscores Beijing's efforts to accelerate domestic semiconductor innovation amid tightening U.S. export controls.
Alibaba's chip debut follows Washington's restrictions on advanced chip exports, which have limited Nvidia to selling its H20 processor in China.
While President Donald Trump approved shipments in July, Beijing swiftly discouraged purchases over security risks, intensifying pressure on Chinese firms to adopt homegrown solutions.
Shares of Nvidia dropped 3.32% Friday and declined another 0.29% in after-hours trading, according to Benzinga Pro.
The sell-off comes as Chinese companies, including Huawei Technologies, Cambricon, and startup MetaX, ramp up domestic chip offerings. Now, Alibaba has also joined the list.
Nvidia has reportedly also paused development of its China-focused H20 chip after Beijing regulators reportedly urged tech giants like Tencent Holdings (OTC:TCEHY) and ByteDance to shift to local alternatives.
Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, downplayed Alibaba's move, calling it a negotiating tactic.
"This is laughable," Gerber wrote on X, formerly Twitter. "The Chinese can't even get the machines that make the good chips. This is posturing so they can get Nvidia Blackwell chips… better they use US technology than work on their own. US will get a cut of sales."
Nvidia reported second-quarter revenue of $46.74 billion, up 56% year-over-year, beating Wall Street expectations. Adjusted EPS reached $1.05, while gross margins stood at 72.7%. The chipmaker guided for third-quarter revenue between $52.92 billion and $55.08 billion, excluding any H20 shipments to China.
Benzinga’s Edge Stock Rankings show NVDA sustaining a strong upward trend across short, medium and long-term periods. More detailed performance insights are available here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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