Feb 19 (Reuters) - Chinese AI startup DeepSeek is

considering outside funding for the first time and has drawn

interest from Alibaba ( BABA ) and state funds, The Information

reported on Wednesday, citing sources with knowledge of internal

discussions.

The Chinese company stunned the tech industry earlier this

year with low-cost AI models that can match or even outperform

Western rivals at a fraction of the cost, stirring doubts about

the lead U.S. has in the race to dominate the technology.

Executives at the Chinese AI firm and its hedge fund parent,

High-Flyer Capital Management, are also talking about whether

DeepSeek should shift its focus to building a business that

generates revenue and eventually profit from research, the

report said.

Alibaba ( BABA ) did not immediately respond to a Reuters request for

comment.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by

Arun Koyyur)