Alibaba Group Holding Limited (NYSE:BABA) has announced its next-generation XuanTie C950 5-nanometer processor, marking a significant stride towards agentic AI.

On Tuesday, Alibaba revealed the 3.2 GHz server chip at an internal conference. The chip, constructed using open-source RISC-V chip architecture, was hailed as “the highest performing RISC-V CPU in the world” at the conference hosted by DAMO Academy, Alibaba’s research arm, Reuters reported.

The XuanTie C950 delivers over three times the performance of its predecessor, the XuanTie C920. However, Alibaba has not revealed which foundry manufactured the chip. Built on the open-standard RISC-V architecture, it enables designers to tailor instruction sets and optimize performance for specific AI workloads—an advantage that is key to advancing AI agents.

Alibaba is ramping up its in-house chip efforts through T-Head, focusing on the Zhenwu 810E series for AI training and inference. Its XuanTie chips target high-performance cloud computing and agentic AI, alongside the launch of Wukong, an enterprise platform designed for AI agent workflows.

RISC-V Growth Hinges On AI Chip Gains

Industry analysis firm SHD Group predicts that by 2031, shipments of RISC-V devices will skyrocket to 36 billion units, with a market size exceeding $300 billion. As a leading CPU supplier, Alibaba is significantly driving the development of China’s RISC-V market, according to Futubull.

However, Meng Jianyi, Chief Scientist at Alibaba’s DAMO Academy, said RISC-V must overcome limits in general-purpose and AI computing to grow its ecosystem. Despite strong adoption across industries, performance gaps and software barriers remain — and only high-performance chips can help it compete with traditional architectures and capitalize on AI opportunities.

T-Head Growth Fuels AI Revenue Push

Alibaba’s T-Head division has shipped over 470,000 AI chips in the last two years, nearing 10 billion yuan ($1.45 billion) in annual revenue. The company’s ambitious plans include surpassing 1 trillion yuan ($144.92 billion) in quick-commerce GMV by FY2028.

Furthermore, the company’s recent price hike for its T-Head AI computing chips and Cloud Parallel File Storage service indicates a strategic move to convert heavy AI investment into near-term revenue. This aligns with the company’s internal restructuring aimed at making AI a more significant profit driver.

According to Benzinga Edge Stock Rankings, Alibaba has a growth score of 58.71% and a value rating of 89.62%. Benzinga’s screener allows you to compare Alibaba’s performance with its peers.

BABA Price Action: On a year-to-date basis, Alibaba ADR declined 19.06%, as per Benzinga Pro. On Monday, it climbed 2.96% to $126.06.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.

Image via Shutterstock