Alibaba Group Holding Ltd. BABA has announced an investment of 380 billion yuan (nearly $53 billion) for its cloud computing and AI infrastructure, making it the largest private computing project to date.
What Happened: on Monday, Alibaba announced its plans to invest an amount that surpasses its total AI infrastructure spending over the past decade, reported South China Morning Post. This investment is on par with half of the initial $100 billion earmarked for the Stargate AI plan by the U.S. Alibaba stated that this commitment underscores its “focus on AI-driven growth and its role as a leading global cloud provider”.
CEO Eddie Wu Yongming, in the conference call last week, revealed that the intends to make significant investments in AI and cloud computing infrastructure over the next three years. However, he did not mention the amount of investment during the call.
Why It Matters: Alibaba’s latest earnings report revealed higher-than-anticipated profit and revenue for the December quarter, fueling investor enthusiasm. The Chinese tech giant’s AI endeavors garnered worldwide attention following reports that Apple AAPL had selected Alibaba as one of its AI partners in mainland China for the Apple Intelligence feature on iPhones. Alibaba also stated that its upgraded Qwen 2.5 Max edition was a strong alternative for DeepSeek‘s R1 model.
In a research note on Monday, Morgan Stanley stated that Alibaba "appears poised to capture the AI cloud opportunity" with its latest investment strategy. The analyst also expects Alibaba Cloud revenue to double in the next three years, to reach 240 billion yuan (nearly $33.10 billion) in 2028.
Meanwhile, equity strategists at UBS said on Thursday that they have replaced PDD Holdings PDD with Alibaba in a model portfolio due to its exposure to AI and quantitative factors.
Besides Alibaba, other Chinese companies have also been investing in AI in a big way. ByteDance, the Chinese parent company of TikTok, allocated over 150 billion yuan ($20.69 billion) in capital expenditure for this year, with a significant portion expected to focus on AI, according to a previous Reuters report.
The ADR of Alibaba Group surged more than 87% over the past year.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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