September 24, 2025 — At the Hangzhou Cloud Summit, Alibaba Cloud announced a strategic partnership with NVIDIA to jointly drive the development of Physical AI. This collaboration will deeply integrate Alibaba Cloud’s AI platform PAI with NVIDIA’s Physical AI software stack, aiming to accelerate the deployment of embodied intelligence, robotics, and autonomous driving applications. The partnership is expected to shorten development cycles and enhance the adaptability of intelligent systems to real-world environments.

What is Physical AI?

Physical AI, also known as Generative Physical AI, is an important direction for AI to extend into the real world. By leveraging multi-modal perception, spatial relationship understanding, and physical rule cognition, Physical AI enables robots and autonomous systems to autonomously perceive, interpret, and perform complex tasks in real-world environments. Unlike traditional generative AI, Physical AI emphasizes interaction with the physical environment, handling real-world attributes such as gravity, collisions, and lighting—thus providing strong support for practical AI applications.

Core Tools and Functions

The Alibaba Cloud–NVIDIA partnership will incorporate the following core tools and datasets:

With the integration of Alibaba Cloud’s big data and AI capabilities, the platform will offer end-to-end Physical AI services, covering data preprocessing, synthetic data generation, model training and evaluation, reinforcement learning, and simulation testing. This one-stop platform will significantly lower the development barrier for enterprises.

Bright Prospects for Physical AI and Industry Players

Physical AI is widely regarded as the next major frontier in AI development, spanning robotics, autonomous driving, and smart manufacturing. The strategic collaboration between Alibaba Cloud and NVIDIA marks a key move for Chinese tech firms to seize opportunities in the global Physical AI value chain. Beyond boosting R&D efficiency, it may also unlock new investment opportunities along related industries.

Below are some representative companies in the Physical AI ecosystem and their areas of focus:

Over the next five years, the markets for embodied intelligence and autonomous driving are expected to sustain a compound annual growth rate of over 20%. Physical AI platforms and ecosystem development are set to become central to both industry growth and investment focus. The Alibaba Cloud–NVIDIA partnership is likely to accelerate commercialization and positively influence the performance and valuations of related listed companies.

Market Reaction

Following the announcement, Alibaba’s U.S.-listed shares (BABA.US) surged nearly 10% in pre-market trading and closed on September 24 at $176.44, up 8.19% for the day with a trading volume of about $9.34 billion. NVIDIA’s stock also moved higher, reflecting investor recognition of Physical AI’s practical value. Industry experts believe the partnership will further strengthen Alibaba’s role in the global AI value chain and boost demand for intelligent hardware and cloud services.

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