Alibaba Plans $431M Lunar New Year AI Push Amid Chatbot Battle

Alibaba’s betting big—$431 million big—on AI, with timing that’s anything but coincidental.

The announcement arrives days before Lunar New Year 2026 (starts Feb. 17), one of Asia’s most lucrative shopping periods, signaling this isn’t just about technology advancement. This is about capturing consumer attention when engagement hits its annual peak.

While tech companies everywhere chase AI supremacy, Alibaba’s commitment to promote its Qwen AI app reveals how the stakes have escalated.

Dynamic action

Alibaba‘s move, announced today (Feb. 2), far exceeds the promotional budgets disclosed by rivals Tencent and Baidu and underscores how the country’s annual holiday season has once again become a critical battleground for user acquisition — this time centered on generative AI rather than payments or social media.

The Lunar New Year period, when hundreds of millions of people travel home and spend extended time with family, has long been viewed by Chinese tech companies as a rare opportunity to attract new users at scale. Heavy marketing, subsidies, and incentives during the holiday can rapidly shift consumer behaviour, sometimes with long-lasting effects.

Alibaba said the new spending programme will begin on Feb. 6, ahead of the public holiday period that starts on Feb. 15 and runs for nine days — longer than in most previous years. The company said the campaign will include incentives for dining, drinks, entertainment, and leisure, with “large red envelopes distributed continuously,” according to its statement.

Red envelopes, or hongbao, are traditionally gifted during the Lunar New Year and have been widely adapted into digital promotions by Chinese internet platforms. While Alibaba did not specify whether the rewards would be distributed as cash or coupons, it said they would be redeemable across its ecosystem, which includes e-commerce platform Taobao and other consumer services.

Alibaba’s pledge dwarfs the commitments announced by its main competitors late last month. Tencent said it would spend 1 billion yuan ($143.8 million) to promote its Yuanbao chatbot app, while Baidu said it would invest 500 million yuan ($72 million) in similar Lunar New Year promotions for its AI products.

Lessons from the payments wars

The strategy echoes earlier moments in China’s internet history, most notably in 2015, when Tencent used digital red envelopes on its WeChat messaging app to drive adoption of WeChat Pay. That campaign proved pivotal in helping WeChat Pay gain ground against Alipay, which had previously dominated China’s mobile payments market.

However, the AI landscape differs from payments in key ways. While mobile payments quickly became essential infrastructure for daily life, the long-term stickiness of consumer-facing AI chatbots is still uncertain. Companies are therefore betting that habitual use during the holiday can translate into sustained engagement later.

AI rivalry intensifies after DeepSeek shock

Competition in China’s AI sector has accelerated since DeepSeek’s R1 model launch in January last year rattled global AI markets. The model’s performance and efficiency surprised industry observers and prompted both domestic and international players to reassess their development timelines and strategies.

Since then, Chinese tech firms have stepped up both investment and product releases, seeking to demonstrate technological relevance and defend their positions at home. Several companies have rolled out upgrades in the run-up to the Lunar New Year, aiming to showcase improved reasoning, multimodal capabilities, and user experience.

DeepSeek is expected to launch its next-generation AI model, V4, in mid-February, featuring strong coding capabilities. The timing suggests that competition could intensify further just as holiday promotions peak.

High stakes for China’s tech giants

For Alibaba, Tencent, and Baidu, the outcome of this Lunar New Year push could influence how investors and regulators view their AI strategies.

While heavy spending may weigh on short-term profitability, companies appear willing to absorb the cost to secure early leadership in a sector seen as central to future growth.

As the Year of the Horse approaches, the race to capture consumer attention through AI has become a closely watched contest in China’s technology sector.

DeepSeek unveiled DeepSeek-OCR 2, a completely revamped optical character recognition system.

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