Alibaba unveils its Zhenwu V900 AI chip. Nvidia's guidance already assumes no China data center sales

Alibaba unveiled a new artificial intelligence chip, the Zhenwu V900, at its cloud unit's Apsara Conference in Hangzhou on Tuesday. Chief executive Eddie Wu called it the "most powerful AI chip in China today," according to The Associated Press, and said it delivers three times the performance of the Zhenwu M890 that Alibaba released in May.

The company also said it plans to expand Alibaba Cloud's data center capacity to more than 20 gigawatts by 2032, CNBC reported, and that its next-generation Qwen 4 model is in training. The AP reported Alibaba plans to train a model with 5 trillion to 10 trillion parameters; its current top model, Qwen3.8-Max, has 2.4 trillion.

What the market did with it

Alibaba shares rose around 3% in Hong Kong, according to CNBC. The reaction in New York was smaller: the U.S.-listed shares were up 1.3% at $117.21 shortly before 11 a.m., and Nvidia was up 0.3% at $228.11, according to Nasdaq data.

The timing is political as much as technical. Chinese leader Xi Jinping is due in Washington on Wednesday for a state visit and a meeting with President Donald Trump, where AI, trade and tariffs are expected to come up, the AP reported. Huawei also unveiled new AI infrastructure last week.

What the headline leaves out

Three things temper the "China catches Nvidia" reading.

The comparison is to Alibaba's own chip. The one performance figure in the coverage is "three times" the M890. Neither CNBC nor the AP reported a benchmark against Nvidia's hardware, so there is no public basis yet for saying how close the V900 comes.

It is not shipping yet. CNBC reported that the V900 is scheduled for mass production and commercial release in the first quarter of 2027. The existing Zhenwu chips already serve more than 650 customers in autos, finance, energy and manufacturing. Wu also said global shortages across the data center supply chain "are currently limiting the speed at which we can scale our compute infrastructure."

Nvidia has already taken China out of its forecast. In its second-quarter results, Nvidia guided to third-quarter revenue of $108.0 billion, plus or minus 2%, and said it "is not assuming any Data Center compute revenue from China" in that outlook. A stronger Chinese chip makes a return to that market harder, but it does not cut into the number Wall Street is working from. That helps explain why Nvidia barely moved. Our Nvidia explainer sets out where its revenue actually comes from.

What traders are watching

• The Trump-Xi meeting and whether export rules on AI chips come up, which is where any change to Nvidia's China assumption would start.
• Alibaba's spending. A 20-gigawatt target implies years of heavy data center investment, and investors will look for it in the capital spending line of Alibaba's next results.
• Independent tests of the V900 once customers get it in 2027.

Sources: CNBC, The Associated Press via Fortune, Nvidia second-quarter fiscal 2027 results release, Nasdaq quote data. This is market information, not investment advice.