TLDR
- Alibaba stock fell about 3% in Wednesday premarket trading near $112.60.
- Chinese regulators reportedly questioned Alibaba and other AI companies over possible data-security issues.
- Alibaba also announced new cloud regions across Europe, Turkey and other overseas markets.
- The company is targeting more than 20 gigawatts of global data-center capacity by 2032.
- Citi sees strong long-term AI cloud potential but expects much heavier capital spending.
Alibaba (BABA) stock fell about 3.2% in Wednesday premarket trading to roughly $112.60 after closing Tuesday at $116.31. The decline came despite another round of major AI and cloud infrastructure announcements from the company.
Alibaba Group Holding Limited, BABA
The stronger near-term catalyst appears to be regulatory concern in China. Alibaba’s Hong Kong stock fell more than 4% after a report that Chinese authorities were investigating possible AI data-security violations involving DeepSeek and Moonshot AI.
The Information reported that representatives from Alibaba, Zhipu, SenseTime, MiniMax and Xiaomi had also been called in for questioning. Reuters said it could not independently verify the report, and the companies had not commented.
Alibaba Pushes Cloud Expansion Overseas
Separately, Alibaba announced plans to open its first cloud regions in Turkey, Finland and the Netherlands over the next 12 months. The company will also expand capacity in Malaysia, Germany, the UAE, France and Hong Kong.
The Netherlands location is expected to open first, in October. Alibaba said the expansion is intended to bring cloud computing and AI resources closer to international customers.
Alibaba Cloud currently operates 107 availability zones across 31 regions. The expansion puts it into more direct competition with Amazon and Alphabet for international cloud and AI workloads.
The company is also aiming for more than 20 gigawatts of global data-center capacity by 2032. That target follows Alibaba’s previously announced plan to invest about $53 billion in AI and cloud infrastructure over three years.
Alibaba unveiled the Zhenwu V900 AI accelerator this week as part of that push. The company says the chip delivers roughly three times the performance of its previous generation and is expected to enter mass production in early 2027.
It is also planning future AI models with between 5 trillion and 10 trillion parameters. Alibaba’s current Qwen3.8-Max model has 2.4 trillion parameters.
Citi Sees Bigger AI Revenue Opportunity
Citi reiterated its Buy rating and $190 target while raising its expectations for Alibaba’s infrastructure spending. The firm now forecasts capital expenditure of roughly 258 billion yuan, 283 billion yuan and 282 billion yuan over fiscal 2027 through 2029.
Citi analyst Alicia Yap estimates Alibaba’s external AI cloud revenue could reach about $168 billion by fiscal 2033. That forecast assumes a major expansion in computing capacity and remains an analyst estimate rather than company guidance.
Alibaba’s cloud and chip operations are already growing quickly. Revenue from the combined cloud computing and T-Head chip unit increased 45% year over year to 48.4 billion yuan in the June quarter.
The main investor risks are the cost of Alibaba’s infrastructure buildout, Chinese regulatory scrutiny, competition from larger global cloud providers and restrictions affecting access to advanced semiconductor technology. The company’s ambitious AI spending will also need to translate into sustained revenue growth to support returns.
For now, the regulatory report is outweighing Alibaba’s new cloud expansion announcements in Wednesday trading. BABA remains down about 3% premarket, while its Hong Kong listing fell more than 4% as investors reacted to uncertainty around China’s AI data-security review.
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