I had originally planned to focus on DeepSeek-V3 and, in particular, the Mixture of Experts (MoE) technique—a hot topic in the AI community. However, I woke up yesterday to news about Alibaba’s latest release, which changes the conversation. More on MoE below.
In a strategic move signaling intensifying competition in the AI space, Chinese tech giant Alibaba has unveiled its newest AI model, Qwen 2.5-Max. The company claims it surpasses some of the most advanced AI models, including DeepSeek-V3, which had only been launched recently. The timing of the announcement, on the first day of the Lunar New Year, underscores Alibaba’s urgency to respond to the meteoric rise of the AI startup DeepSeek.
The AI Race in China
The release of Qwen 2.5-Max during a major Chinese holiday highlights Alibaba’s need to counter DeepSeek’s rapid progress. DeepSeek has made waves with the launch of its AI assistant, powered by DeepSeek-V3 on January 10, and its R1 model on January 20. This success has contributed to a slump in tech stock prices in Silicon Valley and raised questions among investors about the sustainability of AI investments in the U.S.
DeepSeek’s low-cost, open-source approach has shifted the dynamics of the industry. The release of DeepSeek-V2 last May triggered a price war among Chinese firms, forcing companies like Alibaba to slash prices by as much as 97%. Other players such as Baidu and Tencent are scrambling to update their models in response to DeepSeek’s competitive pricing.
Alibaba’s Counterattack: Qwen 2.5-Max
Alibaba’s response to DeepSeek comes in the form of Qwen 2.5-Max, a Mixture-of-Experts (MoE) model designed to outperform DeepSeek-V3 and even other global AI models like OpenAI’s GPT-4 and Meta’s Llama-3.1-405B. According to Alibaba Cloud’s official announcement on WeChat, Qwen 2.5-Max has been trained on over 20 trillion tokens, utilizing techniques such as Supervised Fine-Tuning (SFT) and Reinforcement Learning from Human Feedback (RLHF).
Let me take a moment to dive into MoE. The Mixture-of-Experts architecture is a cutting-edge technique that enhances model efficiency. Instead of activating the entire neural network for every input, MoE dynamically selects specialized subsets of the network (known as “experts”) based on the task at hand. This allows AI models to achieve better performance with less computational cost, improving scalability and efficiency.
Performance Benchmarks: Qwen 2.5-Max vs. DeepSeek-V3
As reported by Alibaba, Qwen 2.5-Max has shown competitive performance on MMLU-Pro, a benchmark measuring college-level problem-solving abilities. The company claims its model performs favorably against other top models like GPT-4 and Claude-3.5-Sonnet across a variety of AI-driven applications. See benchmark here.
The DeepSeek Disruption and the Future of AI in China
DeepSeek’s success has raised questions about the efficiency of traditional, large corporations in developing AI. In a rare interview with Waves, DeepSeek’s founder, Liang Wenfeng, suggested that tech giants with bureaucratic structures and high operational costs may struggle to compete. DeepSeek’s lean operation, powered mostly by recent graduates and Ph.D. students, has disrupted the industry, emphasizing their mission to achieve Artificial General Intelligence (AGI)—a system that surpasses human capabilities in economically valuable tasks, as defined by OpenAI.
While Alibaba remains a dominant force, DeepSeek’s impact is undeniable. The company is challenging traditional business models and pushing other firms to rethink how they innovate and scale AI technologies.
Qwen 2.5-Max’s Accessibility and Industry Implications
Developers can access the Qwen 2.5-Max API through Alibaba Cloud under the model name “qwen-max-2025-01-25.” With compatibility for OpenAI’s API, integration into existing AI-powered applications is seamless, paving the way for broader adoption of Alibaba’s technology across AI-driven industries.
Impact on “Legacy AI Investments” and VC Backing
The rise of DeepSeek, coupled with Alibaba’s response with Qwen 2.5-Max, has put venture capital firms with heavy investments in legacy AI models in a precarious position. According to a recent PitchBook report, VCs with large stakes in previous-generation AI technologies are now facing difficulties, as DeepSeek’s disruptive pricing and performance have raised concerns. Investors had poured billions into high-cost, high-maintenance AI ventures, but now, cheaper and more efficient alternatives from China threaten to upend their strategies.
Relative Size of AI Investments from PitchBook
- Andreessen Horowitz: $7.1B in 20 deals
- Sequoia: $6.4B in 13 deals
Venture capital firms are increasingly concerned that the economics of AI infrastructure are changing rapidly. The traditional model, where vast capital expenditure was needed to train and maintain AI systems, is being challenged by more efficient, lower-cost models. This shift is prompting investors to reassess their portfolios and reconsider the value proposition of legacy AI systems.
As Alibaba advances Qwen 2.5-Max, we’re likely to see further downward pressure on AI development costs, which could force both startups and established players to adopt more sustainable business models. Balancing performance and cost will be crucial to survival in this evolving landscape.
A New Era in Healthcare AI Innovation?
We’ve long advocated for AI’s potential to impact consumer healthcare. However, we still believe AI isn’t ready to meaningfully assist doctors in the day-to-day clinical environment, which accounts for 90% of healthcare visits. The cost-to-value ratio is simply not there. In a recent report, we’ll discuss how doctors who were given prompts from AI for patient communications only used AI-generated suggestions 18% of the time. This 82% failure rate reinforces our belief that AI isn’t yet equipped to treat patients or support doctors in everyday clinical work. While AI has made significant strides in specialties like radiology, pathology, and genetics, it’s still not at the level needed for general patient care.
That said, we believe AI’s potential lies in empowering consumers to take more control of their own healthcare, particularly their Electronic Health Records (EHR). By using small language models to aggregate and review data, consumers could gain valuable insights into their wellness, improving their ability to communicate with healthcare providers.
The announcements from DeepSeek-V3 and Qwen 2.5-Max this week will make it easier, faster, and more cost-effective for AI-driven companies—especially in health and wellness—to enter the market. As a result, venture capitalists and investors can no longer claim that advancing AI models requires $100 million. These new developments make it clear: the future of AI-driven healthcare is closer, more accessible, and more affordable than ever.
About HealthScoreAI ™
Healthcare is at a tipping point, and HealthScoreAI is positioning to revolutionize the industry by giving consumers control over their health data and unlocking its immense value. U.S. healthcare annual spending has exceeded $5 trillion with little improvement in outcomes. Despite advances, technology has failed to reduce costs or improve care. Meanwhile, 3,000 exabytes of consumer health data remain trapped in fragmented USA systems, leaving consumers and doctors without a complete picture of care.
HealthScoreAI seeks to provide a unique solution, acting as a data surrogate for consumers and offering an unbiased holistic view of their health. By monetizing de-identified data, HealthScoreAI seeks to share revenue with consumers, potentially creating a new $100 billion market opportunity. With near-universal EHR adoption in the USA, and advances in technology, now is the perfect time to capitalize on the data available, practical use of AI and the empowering of consumers, in particular the 13,000 tech savvy baby boomers turning 65 every single day and entering the Medicare system for the first time. Our team, with deep healthcare and tech expertise, holds U.S. patents and a proven track record of scaling companies and leading them to IPO.
Noel J. Guillama-Alvarez
https://www.linkedin.com/in/nguillama/
+1-561-904-9477, Ext 355
https://qwenlm.github.io/blog/qwen2.5-max/
https://www.reuters.com/technology/artificial-intelligence/alibaba-releases-ai-model-it-claims-surpasses-deepseek-v3-2025-01-29/