Alibaba Group Holding Ltd. (NYSE:BABA) shares rose on Thursday after reports indicated greater access to Nvidia Corp. (NASDAQ:NVDA) advanced artificial intelligence chips in China.
The Chinese e-commerce giant pared some of those gains in early trading on Friday, following a more than 5% rally in the previous session. Thursday’s move came after reports that China could approve limited imports of Nvidia’s H200 chips as soon as this quarter.
Nvidia is restricting its sales of H200 AI chips to China as it works to reopen a critical market while managing geopolitical tensions between Washington and Beijing.
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The company is now requiring Chinese customers to pay in advance for H200 orders and to accept rigid terms with no flexibility, Reuters reported.
At the same time, Chinese regulators are preparing to approve limited imports of H200 as soon as this quarter for select commercial uses, while restricting access for the military, sensitive government agencies and state-owned companies, according to Bloomberg.
Officials have also asked some Chinese technology companies to temporarily suspend orders and are considering requirements for buyers to buy domestically made chips alongside Nvidia products.
In that context, Alibaba has privately told Nvidia that it is interested in ordering more than 200,000 units of the H200, Bloomberg reported on Friday, citing a source familiar with the matter.
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Investors responded to expectations that China will allow domestic companies to use Nvidia’s H200 chips, a development that would support companies like Alibaba. Vey-Sern Lingthe CEO of Union Bancaire Privée told Bloomberg on Friday.
The H200 is an older generation chip that the Trump administration says can be exported to China amid rising geopolitical tensions between the countries.
Alibaba has become the largest investor in AI among Chinese technology companies, and a more reliable chip supply would strengthen its cloud business.
The stock gained 92% over the past 12 months, driven by strong investor confidence in its significant investments and growth in AI, particularly its cloud computing division.
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