Alibaba updates video AI model with avatars

Alibaba has released an updated version of its open-source video-generating model, Wan2.2-S2V, which can turn portrait photos into avatars that can speak, sing, and perform.

The Hangzhou-based company said the tool supports prompts for speech, singing, and other performances.

Alibaba accelerated its AI efforts after DeepSeek’s emergence on the global stage this year, amid competition from Alphabet Inc.’s Google, AI startup Manus, and Kuaishou Technology, all of which have launched new or improved video creation tools in recent months.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Alibaba’s massive AI investments haven’t yet translated to proportional revenue growth

Alibaba’s $53 billion three-year AI investment plan represents one of the tech industry’s largest single technology bets. However, the company’s overall revenue growth remains modest2.

Despite achieving triple-digit AI revenue growth for six consecutive quarters, this still constitutes a small portion of Alibaba’s total cloud revenue3.

The company’s latest quarterly results showed only a 7% revenue increase, highlighting the persistent gap between substantial AI investments and measurable financial returns1.

This reflects a broader industry challenge where AI infrastructure costs often outpace immediate revenue generation, requiring companies to balance long-term strategic positioning with short-term financial performance expectations.

2️⃣ China’s AI video generation race intensifies as competitors rapidly iterate

Alibaba’s video AI update comes amid fierce competition in China’s AI video generation market, where companies like Kuaishou have also released upgraded models in recent months1.

The company has been building AI capabilities systematically since 2017, starting with its E-commerce Brain system that personalized shopping experiences for over 500 million users4.

Now Alibaba has open-sourced over 200 AI models with more than 300 million downloads globally, demonstrating a strategy of fostering widespread adoption to build market presence5.

The rapid succession of AI model updates across Chinese tech companies suggests an accelerating innovation cycle, where maintaining competitive positioning requires frequent technological iterations rather than periodic major releases.