TLDR:
- Alibaba commits $53 billion investment in AI infrastructure over the next three years, marking one of China’s largest private enterprise investments in cloud and AI hardware
- Company’s AI product revenue has grown by triple digits for six consecutive quarters, with their Qwen AI model securing a partnership with Apple for Chinese iPhones
- Alibaba’s stock has risen nearly 70% in 2025, with multiple analysts maintaining buy ratings despite some concerns about high capital expenditure
- Jack Ma made a public appearance at Xi Jinping’s entrepreneur summit, signaling Alibaba’s return to political favor
- The company is shifting focus to artificial general intelligence (AGI) under CEO Eddie Wu’s leadership, though investment timeline lags behind US competitors
Alibaba Group Holding Ltd. has announced plans to invest 380 billion yuan ($53 billion) in artificial intelligence infrastructure over the next three years. The investment will focus on building data centers and other AI-related facilities, marking a major shift in the company’s strategy.
The Chinese technology giant’s investment represents one of the largest commitments to AI infrastructure by a private Chinese enterprise. The planned spending exceeds Alibaba’s total investment in similar technologies over the past decade, according to company statements.
The announcement comes as Alibaba reports strong performance in its AI division. The company’s AI-related product revenue has shown triple-digit growth for six consecutive quarters through December 2024. Their in-house developed Qwen AI model has performed well in benchmark tests, leading to a partnership with Apple Inc. to incorporate Alibaba’s AI technology into iPhones sold in China.
Alibaba’s stock has responded positively to these developments, with U.S.-traded shares rising nearly 70% since the beginning of 2025. Several major investment firms maintain buy ratings on the stock, though Morgan Stanley has expressed caution, citing concerns about increased capital expenditure and potential risks from weak consumption.
The investment timeline stretches over three years, placing Alibaba behind its U.S. competitors in terms of immediate AI spending. Microsoft expects to spend $80 billion on AI data centers in the current fiscal year, while Meta has allocated $65 billion for 2025.
U.S. sanctions limiting access to advanced Nvidia AI chips have affected Chinese companies’ computing capabilities. However, this restriction has also helped contain costs for firms like Alibaba as they build out their AI infrastructure.
Under the leadership of CEO Eddie Wu, who took the helm in 2023, Alibaba has declared Artificial General Intelligence (AGI) as its primary objective. This marks a substantial shift from the company’s traditional focus on e-commerce and cloud services.
The company’s core e-commerce division continues to show growth, with Taobao and Tmall Group reporting a 5% increase in sales in the latest quarter. This performance suggests Alibaba is maintaining stability in its traditional business while pursuing its AI ambitions.
Jack Ma, Alibaba’s co-founder, recently attended a high-profile summit with Chinese President Xi Jinping, joining other technology entrepreneurs. His presence at the event indicates Alibaba’s improved standing with Chinese authorities following years of regulatory scrutiny that began in 2020.
AI Startup Investments
The company has also invested in several promising Chinese AI startups, including Moonshot and Zhipu, as part of its broader AI strategy. These investments complement Alibaba’s internal development efforts and expand its presence in the AI ecosystem.
Citigroup analyst Alicia Yap notes that the investment amount exceeds her estimates by approximately 30 billion yuan. The scale of investment reflects Alibaba’s commitment to becoming a key partner for companies developing and applying AI technologies.
Some investors have questioned whether major tech companies are overestimating future demand for AI services. TD Cowen analysts recently highlighted Microsoft’s cancellation of data center leases in the U.S., suggesting possible concerns about overcapacity in AI computing.
Hong Kong’s market has responded positively to Alibaba’s AI focus, with the company’s locally traded shares contributing to the Hang Seng index reaching a three-year high. This performance indicates growing investor confidence in Chinese technology companies’ AI initiatives.
Current capital expenditure has increased to 11% of revenue in the latest quarter, up from 3% in the previous period. Management has acknowledged this higher spending may impact future margins as the company builds out its AI infrastructure.
The investment announcement reinforces Alibaba’s commitment to competing in the global AI market, despite challenges from U.S. sanctions and competition from both domestic and international rivals.
