(Bloomberg) — Alibaba Group Holding Ltd.’s shares surged to their highest in nearly four years after revealing plans to ramp up AI spending past an original $50 billion-plus target, joining tech leaders pledging ever-greater sums toward a global race for technological breakthroughs.
Chief Executive Officer Eddie Wu anticipates overall investment in artificial intelligence accelerating to some $4 trillion worldwide over the next five years — and Alibaba needs to keep up. The company will soon add to a plan laid out in February to spend more than 380 billion yuan ($53 billion) developing AI models and infrastructure over three years, he said. His cloud division, which already operates services from the US to Australia, intends to launch its first data centers in Brazil, France and the Netherlands in the coming year.
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Wu made his projections while outlining plans to roll out Qwen models and “full-stack” AI technology, reflecting Alibaba’s growing ambitions to both develop services and the infrastructure — such as chips — that underpin the technology. Its shares rose as much as 7.8% in Hong Kong, helping lift Chinese chipmakers ACM Research (Shanghai) Inc. as much as 15% and NAURA Technology Group Co. 10%.
The bullish reaction underscores global exuberance for all things AI, with investors betting massive capital spending will ultimately prove profitable. While skeptics have warned of a bubble in the making, for now markets are viewing such outlays as a sign of growing corporate confidence in the technology.
“The industry’s development speed far exceeded what we expected, and the industry’s demand for AI infrastructure also far exceeded our anticipation,” Wu told a developer conference in Hangzhou on Wednesday. “We are actively proceeding with the 380 billion investment in AI infrastructure, and plan to add more.”
From Huawei Technologies Co. to Tencent Holdings Ltd., China’s biggest tech companies are pouring unprecedented sums of money into AI. They join a wave of spending by American counterparts from OpenAI to Meta Platforms Inc. seeking to build and popularize a technology with the potential to transform economies and tip the world’s geopolitical balance.
Total capital expenditure on AI infrastructure and services by Alibaba, Tencent, Baidu Inc. and JD.com Inc. could top $32 billion in 2025 alone, according to Bloomberg Intelligence. That’s a big jump from just under $13 billion in 2023.
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All of China’s internet majors are developing AI models and services at a rapid clip, including Tencent’s Hunyuan and Baidu’s Ernie. On Wednesday, Alibaba unveiled its new Qwen3-Max large language model and a series of other improvements to its suite of AI offerings.
Refocusing the business around artificial intelligence has started bearing fruit for Wu and Alibaba.
In the most recent quarter, the Hangzhou-based company reported triple-digit growth in its AI-related products. Its cloud division also posted a better-than-expected 26% jump in sales, making it the group’s fastest-growing unit. The company’s stock had more than doubled this year.
“Companies only gain confidence to invest more when the visibility of the returns improves,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “So when they say they are raising investments in AI, it indicates good demand from customers and good ROI.”
But like other Chinese companies, Alibaba faces a dilemma over access to Nvidia Corp.’s AI processors, which are needed to train advanced models.
On Wednesday, Wu talked about hardware innovations that Alibaba is working on, including chips and faster computers and networking — all pivotal components of data centers. It’s secured a high-profile customer for its AI chips: Chinese state media reported last week the country’s No. 2 wireless carrier China Unicom would deploy the Pingtouge or “T-Head” AI accelerators.
Beijing is pushing the country’s firms to wean themselves off Nvidia’s chips, nearly all of which are blocked by US export controls. The government recently urged companies not to use Nvidia’s RTX Pro 6000D, a graphics card for workstations that can be repurposed for AI applications.
That’s fueled a renewed urgency for Chinese tech leaders to build their own chip industry. Alibaba has for years been trying to develop hardware to reduce Chinese reliance on American suppliers. In 2018, it acquired Chinese chip design house Hangzhou C-Sky Microsystems Co. and established its semiconductor unit T-Head the same year.
What Bloomberg Intelligence Says
Alibaba’s revised AI investment plan, signaled by the CEO to exceed 380 billion yuan over three years, is unlikely to generate a meaningful financial return on investment. Alibaba’s free cash flow swung to a $2.6 billion outflow in fiscal 1Q as quarterly capital spending more than tripled to 38.6 billion yuan ($5.4 billion). AI will remain more a driver of sentiment than incremental earnings at Alibaba and Baidu, with Tencent’s internal-focused strategy standing a greater chance of success.
– Robert Lea and Jasmine Lyu, analysts
Click here for the research.
Huawei, China’s premier chip designer, last week laid out a three-year roadmap to challenge Nvidia’s dominance.
Rotating Chairman Eric Xu outlined the usually secretive company’s next generation of AI chips, twinned with its upgraded “SuperPod” designs — a term borrowed from Nvidia’s own playbook that refers to a data center platform that encompasses computing, storage, networking, software and infrastructure management technologies.
It remains to be seen whether any of Huawei’s claims will hold up over time — and whether their designs can be produced at scale. Huawei surprised the tech world by introducing a 7-nanometer chip to power its Mate 60 Pro smartphone in 2023, but it hasn’t been able to advance beyond that level since. Xu on Thursday also did not elaborate on how the company will manufacture the new chips — a potentially serious choke point.
–With assistance from Jeanny Yu, Lianting Tu and Vlad Savov.
(Updates with shares, Alicloud centers from the second paragraph.)
