Alibaba’s Strategic Shift: Plans to Invest $53 Billion in AI

Alibaba Group Holding has committed to investing over 380 billion yuan ($53 billion) in AI infrastructure, including data centers, over the next three years. This significant investment highlights the e-commerce giant’s aspiration to emerge as a frontrunner in the field of artificial intelligence.

The internet company co-founded by Jack Ma aims to allocate more resources to its AI and cloud computing initiatives than it has in the previous decade. Alibaba envisions establishing itself as a crucial ally for companies that are building and implementing AI into practical applications as the demand for computing power grows alongside evolving models, as stated on the company’s official blog.

Alibaba is recalibrating its business strategy, which was adversely affected by a government crackdown starting in 2020, and is now concentrating its efforts on e-commerce and AI. Recently, Chief Executive Officer Eddie Wu announced that Artificial General Intelligence (AGI) has become the company’s main focus, entering a competitive arena currently dominated by players like OpenAI and major U.S. corporations, including Microsoft Corp. and Alphabet Inc.

Major technology companies such as Meta Platforms and Amazon.com have also committed billions towards the necessary data centers for training, developing, and hosting AI services, signaling confidence in the future of this technology. However, Wall Street has started to express doubts about whether there will be sufficient demand to utilize all this capacity, especially after Chinese newcomer DeepSeek revealed a model trained at a fraction of the costs compared to many competitors. As a result, Alibaba’s shares in Hong Kong lost gains and fell by as much as 2.5% on Monday.

Alibaba’s three-year investment plan is behind its U.S. counterparts; for instance, Microsoft expects to spend $80 billion this fiscal year on AI data centers, while Meta has allocated around $65 billion for 2025. This discrepancy is partly due to Alibaba being a relatively recent participant in the sector, although it has run a globally equivalent platform to AWS for several years. Additionally, Chinese firms face restrictions from U.S. sanctions that prevent them from purchasing the most expensive AI chips from Nvidia Corp., limiting their computing capabilities while assisting in controlling costs.

Nonetheless, investors have welcomed Alibaba’s intensified efforts to compete in the AI landscape. Wu’s mention of AGI—advanced, theoretical AI systems capable of replicating or matching human cognitive abilities—is particularly noteworthy considering Alibaba’s traditional focus on online retail.

On Thursday, Alibaba reported its fastest revenue growth rate in over a year, bolstered by its two most critical divisions. Joe Tsai and Wu—two of Ma’s most trusted associates—assumed leadership of the company in 2023 and redirected investment toward these focal areas.

In 2025, Alibaba has increased its market value by over $100 billion, although it remains significantly below its pre-crackdown heights. Jack Ma himself participated in a prominent televised summit called by Chinese President Xi Jinping last week, signaling a resurgence in Alibaba’s standing after years of being sidelined. This gathering attracted prominent entrepreneurs from various sectors, particularly within the AI landscape.

Following the launch of OpenAI’s chatbot, Alibaba has invested in several of China’s leading startups, including Moonshot and Zhipu. The company has prioritized enhancing its cloud services, vital for AI development, and has cut prices to regain customers lost during challenging periods. Alibaba recently introduced a Qwen model that excelled in official benchmark evaluations, reflecting the company’s growing significance in the industry. Apple Inc. is now integrating Alibaba’s AI technology into its Chinese iPhones, a testament to Alibaba’s capabilities.

© 2025 Bloomberg

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