Key points
- Bloomberg reported July 31 that Moonshot AI has a computing power agreement with Alibaba covering about 20,000 Nvidia chips, described as a large share of the capacity behind its Kimi models. Alibaba owns about 36% of Moonshot, which closed a round on July 29 at a $35 billion valuation.
- Alibaba is one of about 10 Chinese companies cleared to buy Nvidia H200 chips, capped at 75,000 units each. A Commerce official told Congress on July 14 that shipments under about $10 billion of approved licenses remain trivial, because Beijing told Chinese firms to hold off.
- White House science director Michael Kratsios said on July 21 that Moonshot trained on export-banned GB300 servers, including systems in Thailand. Moonshot and Nvidia have not commented. China's embassy in Washington called the claim groundless.
On July 31, 2026, Bloomberg reported that Moonshot AI runs its Kimi models on about 20,000 Nvidia (NVDA) chips supplied by Alibaba (BABA) under a computing power agreement. Alibaba owns about 36% of Moonshot and hosts it. The shareholder is also the landlord.
Ten days earlier, the White House said the chips that matter came from somewhere else.
Michael Kratsios, director of the White House Office of Science and Technology Policy, said on July 21 that Moonshot "acquired GB300-equipped servers and has accessed GB300s in Thailand, likely to train its AI models." He said the company also ran large-scale distillation of Anthropic's Fable model on a platform built to avoid detection.
The chips Alibaba was cleared to buy never showed up
President Trump cleared the H200 for approved Chinese customers on Dec. 8. By May about 10 Chinese companies held conditional clearances, with Alibaba, Tencent, ByteDance and JD.com (JD) among them. Each buyer can take up to 75,000 units. Purchases run through Nvidia, Lenovo or Foxconn, and carry a 25% tariff.
Almost nothing shipped. A Commerce official told Congress on July 14 that deliveries remain trivial against about $10 billion in approved licenses. Chinese firms held back after guidance from their own government, which is pushing domestic silicon from Huawei.
So Alibaba holds permission to buy 75,000 of the best chips it can legally get, has taken close to none, and still handed 20,000 Nvidia chips to Moonshot. Those are chips it already owned.
Moonshot's own deployment guidance for Kimi K3 tells customers to wire up at least 64 HGX H20 chips. The H20 is the cut-down part Nvidia is allowed to sell into China and Beijing allows in.
Nvidia's CEO says the China business is already gone
Jensen Huang, Nvidia's chief executive, said on May 21 that the company has "largely conceded" China's AI chip market to Huawei. He has argued through this year that US export controls have "largely backfired," and that Chinese open-weight models are now structural infrastructure rather than a fringe. Huang declined a Senate Banking Committee invitation to testify on China chip sales on June 8.
Nvidia's own fiscal 2027 outlook assumes no data center compute revenue from China at all. It shipped no data center Hopper product into China in the April quarter, against $4.6 billion in the same quarter a year earlier.
Nvidia's own chief executive is the best argument that Alibaba's unused clearance matters less than the 75,000 headline suggests.
What Washington says K3 was trained on
The Information reported on July 28 that Kimi K3 was trained partly inside China on Nvidia Blackwell chips. No single vendor had enough Blackwell capacity, so Moonshot pooled compute from at least two Chinese cloud providers and tuned the networking between the sites. The same report said Moonshot is hunting more Blackwell for a larger successor, K4.
Those two providers have not been named. Alibaba has not been named among them and has not been accused of anything.
Moonshot has not responded to any of it. Neither has Nvidia.
The number Alibaba reports on August 28
Eddie Wu, Alibaba's chief executive, told analysts on the May 13 earnings call that the company would likely "overshoot" its capital expenditure target of 380 billion yuan, about $52 billion USD across three years. He said AI products made up 30% of external cloud revenue that quarter.
Wu was direct about the payoff. "Returns on the company's investments over the next three to five years are extremely clear," he said, adding that he does not "really see much of an issue in terms of a so-called AI bubble" over the next three years.
Cheap Nvidia access is an input to that math, and cloud margin is the line that shows whether it is working. Alibaba reports it on August 28. Nvidia reports on August 26.
Alibaba put about $800 million into Moonshot in early 2024 at a $2.2 billion valuation, per its own filing. Moonshot closed $3.5 billion of new money on July 29 at $35 billion and is talking to investors about a follow-on at $50 billion ahead of a Hong Kong listing it wants done inside six months. New money dilutes, so the 36% will not hold.
Where the stocks stand
Alibaba closed at $116.32 on Thursday, July 30. Nvidia closed at $195.04. Both opened higher on Friday. Alibaba traded at $119.62, up 2.8%, and Nvidia at $197.70, up 1.4%, as of 9:44 a.m. ET.
Anthropic chief executive Dario Amodei spent July 27 arguing that China should be cut off from US chips, with industrial-scale distillation as his second complaint. Both charges now have Moonshot's name attached. The model at the center of them gave Nvidia its second DeepSeek moment two weeks ago, and Alibaba owns a third of the company that built it.
Liu Chang, a spokesperson for the Chinese embassy in Washington, rejected the Kratsios accusation as "completely groundless."
"Relevant individuals in the U.S. should respect facts, abandon prejudice, and stop denigrating the achievements of China's AI industry development," Liu said.
Sources
- Bloomberg, "Moonshot's Kimi Built on 20,000 Nvidia Chip Cluster From Alibaba," July 31, 2026
- The Information, on Moonshot seeking additional Blackwell chips for Kimi K4, July 28, 2026
- Michael Kratsios, White House Office of Science and Technology Policy, public statement on Moonshot, July 21, 2026, and CNBC's report of the Chinese embassy response, July 23, 2026
- Alibaba Q4 FY2026 earnings call remarks from chief executive Eddie Wu, May 13, 2026
- CNBC, on Jensen Huang's comments that Nvidia has largely conceded China to Huawei, May 21, 2026, and Nvidia first quarter fiscal 2027 results and outlook, May 20, 2026
This is general market commentary and opinion, not investment advice. Markets can go down as well as up, and you can lose money. Always do your own research and consider speaking with a licensed financial professional before making any investment decision.
