Alibaba and Nvidia Forge Groundbreaking AI Partnership to Drive Innovation and Infrastructure Expansion

Alibaba Group and Nvidia Corporation announced a milestone partnership in 2025. This collaboration aims to accelerate the development of physical AI applications, including humanoid robotics, autonomous vehicles, and intelligent connected environments, while simultaneously expanding AI infrastructure globally.

A Strategic Alliance Amidst Growing AI Competition

In September 2025, Alibaba unveiled its collaboration with Nvidia at the annual Apsara Conference in Hangzhou, China. The deal entails integrating Nvidia’s full Physical AI software stack into Alibaba Cloud’s AI platform, marking a significant milestone that brings the world’s leading AI chipmaker together with one of Asia’s largest cloud and AI service providers.

Alibaba CEO Eddie Wu emphasized the urgent and expansive demands for AI infrastructure and innovation, stating, “The speed of AI industry development has far exceeded our expectations, as has the demand for AI infrastructure.” This alignment between Alibaba’s cloud capabilities and Nvidia’s AI tools is designed to bolster both companies’ competitive edges amid fierce rivalry in the global AI sector.

The partnership is particularly notable given ongoing geopolitical technological tensions wherein Washington restricts Nvidia’s export of its most advanced AI chips to China. Despite this, Alibaba is forging ahead by focusing on software integration of Nvidia’s Physical AI development tools rather than direct hardware purchases, complementing its domestic chip development initiatives.

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Leveraging Nvidia’s Physical AI Software Suite

Nvidia’s Physical AI software forms the bedrock of this collaboration. The technology constructs detailed three-dimensional replicas of physical environments, enabling synthetic data generation critical for training AI models used in robotics, smart factories, autonomous driving, and more.

By embedding this software within Alibaba Cloud’s Platform for AI (PAI), developers worldwide gain access to a comprehensive, cloud-native platform designed to facilitate rapid advancements in physical AI solutions. Users can simulate complex real-world scenarios and apply reinforcement learning techniques to train embodied AI systems in a scalable, flexible environment.

Physical AI—often referred to as embodied AI—focuses on systems that interact physically with their surroundings, such as humanoid robots capable of dexterous manipulation or autonomous vehicles navigating dynamic urban scenes. Nvidia and Alibaba’s partnership promises to catalyze innovation in these areas by democratizing access to sophisticated simulation and model training tools.

Alibaba’s Massive AI Investment Drive

This collaboration coincides seamlessly with Alibaba’s announcement earlier in 2025 to funnel 380 billion yuan (approximately $53 billion) over three years into AI and cloud computing infrastructure. The funding underscores Alibaba’s commitment to ascend as a global AI powerhouse beyond its established e-commerce dominance.

Alibaba plans expansive data center rollouts internationally, with new facilities planned in Brazil, France, the Netherlands, Mexico, Japan, South Korea, Malaysia, and Dubai. This significantly broadens Alibaba Cloud’s footprint—already one of the largest globally with 91 operational zones in 29 countries.

These data centers will not only support Alibaba’s core cloud clients but act as crucial AI infrastructure hubs, hosting advanced AI model training and inference workloads, including those leveraging Nvidia’s AI stack. The partnership paves the way for more efficient, large-scale AI compute resources combining Alibaba’s cloud scale with Nvidia’s graphics processing unit (GPU) innovations.

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Advancing Cutting-Edge AI Models: The Qwen3-Max Breakthrough

Concurrent with the Nvidia partnership announcement, Alibaba showcased its latest AI achievement—Qwen3-Max, a trillion-parameter large language model and the company’s most capable to date. Designed with coding proficiency, multi-modal understanding, and agentic AI capabilities, Qwen3-Max stands as a cornerstone of Alibaba’s AI product suite.

The integrated infrastructure with Nvidia enables greater performance optimization and scalability for these massive models, ensuring they can be deployed commercially across industries requiring complex reasoning, natural language processing, and autonomous decision-making.

Qwen3-Max highlights Alibaba’s prowess in indigenous AI research, closing the gap with competitors such as OpenAI and Google. The model is applicable in AI-powered coding tools, customer service automation, content generation, and intelligent virtual assistants, supported by the power of Alibaba Cloud and accelerated by Nvidia’s hardware and software ecosystem.

Expanding AI Capabilities into Robotics and Smart Environments

Beyond large language models, the Alibaba-Nvidia collaboration aims to push physical AI into emerging markets like humanoid robotics, self-driving cars, and intelligent automation within factories and warehouses. By unifying simulation, model training, and deployment tools, the partnership lowers barriers for enterprises developing AI-powered physical systems.

Analysts describe this union as a positive signal encouraging broader adoption of embodied AI technologies in China. It enables developers to build, test, and fine-tune robot behaviors in virtual 3D environments before deployment, optimizing productivity and reducing risks associated with real-world trials.

Alibaba Cloud customers gain direct access to Nvidia’s robotics and AI toolkits through the PAI platform, fostering innovation loops where AI models can evolve swiftly from concept to real-world application.

Navigating Geopolitical Challenges with Domestic Innovation

While the Alibaba-Nvidia partnership advances software collaboration, Alibaba simultaneously strengthens its homegrown AI chip ecosystem, imperative due to US export restrictions on high-end Nvidia GPUs into China. Alibaba’s semiconductor division produces competitive AI chips, including the Tianji series, supporting the majority of China’s data centers.

Alibaba has also developed a proprietary high-performance data transmission technology, creating network fabrics to circumvent reliance on Nvidia’s interconnects. These efforts position Alibaba to maintain resilience and sovereignty over its AI hardware stack while benefiting from Nvidia’s software capabilities and AI development ecosystem.

Impact on Investors and the Future AI Landscape

Investor sentiment reacted strongly to the announcement, with Alibaba shares surging nearly 10% to a four-year high in Hong Kong and similar gains observed in U.S. premarket trading. The market views the partnership and increased AI spending as key catalysts for Alibaba’s long-term revenue growth and diversification beyond e-commerce.

Alibaba’s strategic move to elevate AI as a core business pillar complements global trends where cloud service providers and AI chip manufacturers seek mutually reinforcing alliances. As AI applications proliferate, especially in physical AI domains, the Alibaba-Nvidia partnership places both companies at the forefront of innovation and industrial applicability.

A Partnership Fueled by Innovation and Scale

The Alibaba-Nvidia collaboration represents a pivotal moment in global AI evolution, fusing extensive cloud infrastructure and sophisticated AI software tools targeted at physical AI challenges and largescale AI deployments.

By leveraging Nvidia’s Physical AI software combined with Alibaba’s ambitious investments in infrastructure and AI model innovation—exemplified by Qwen3-Max—the partnership offers a powerful, scalable platform for next-generation AI applications.

As AI industries accelerate, this collaboration is positioned to drive breakthroughs in humanoid robotics, autonomous systems, smart manufacturing, and beyond, shaping the future of intelligent physical systems worldwide while navigating geopolitical complexities through complementary domestic innovation.