China’s tech powerhouse Alibaba revealed plans to invest over $50 billion in artificial intelligence and cloud computing over the next three years, signaling a bold push into cutting-edge technology.
The announcement, made on Monday, comes on the heels of a meeting between co-founder Jack Ma and President Xi Jinping, hinting at renewed government support for the private sector.
At a glance:
- Alibaba will spend at least $53 billion (380 billion yuan) on AI and cloud computing through 2028.
- The investment aims to boost Alibaba’s technological innovation and AI-driven growth.
- Shares dropped over 9% in New York as investors worried about profitability impacts.
- The move follows an 8% revenue increase reported last week, surpassing expectations.
A Major Commitment to Technology
Alibaba’s statement on Monday outlined its intention to pour at least 380 billion yuan ($53 billion) into advancing its cloud computing and AI infrastructure over the next three years. The company emphasized that this investment, which exceeds its total spending on AI and cloud over the past decade, reflects a strong focus on long-term technological leadership and growth driven by artificial intelligence.
The announcement came shortly after Alibaba reported an 8% revenue increase for the quarter ending December, reaching 280 billion yuan, which beat analyst estimates. CEO Eddie Wu credited the results to “substantial progress in (Alibaba’s) ‘user-first, AI-driven’ strategies and the re-accelerated growth of our core businesses.” Despite a rocky past few years due to a regulatory crackdown from Beijing starting in 2020, the company’s shares have soared to three-year highs since January, fueled by investor enthusiasm for Chinese tech stocks.
However, Monday’s news sparked a sharp decline in New York, with shares falling more than 9% by 16:35 GMT, as concerns grew that the hefty spending could hurt short-term profits. A Briefing.com note highlighted investor anxiety, stating, “The main takeaway is that Alibaba’s ambitious spending plans for fiscal 2025 are creating some anxiety that the company’s bottom-line will take a sizeable hit this year, negating the momentum that it has garnered.”
Signs of a Thawing Relationship with Beijing
The timing of the investment announcement is notable, coming just a week after Jack Ma, Alibaba’s influential Co-Founder, met with President Xi Jinping alongside other business leaders. Xi praised the private sector during the rare gathering, calling current economic challenges “surmountable,” a statement seen as a green light for companies like Alibaba. Ma, who stepped back from an executive role and has kept a low profile since regulators halted Ant Group’s IPO in 2020, appears to be re-emerging as a key figure. His presence at the meeting suggests a possible warming of ties between Alibaba and the Chinese government, which has historically been tough on the tech sector.
While Alibaba didn’t specify how the $53 billion would be allocated, the company made clear its goal is to solidify its position in AI and cloud computing. This follows a broader trend of recovery in China’s tech industry, lifted recently by innovations like a chatbot from startup DeepSeek.
For conservative investors watching global markets, Alibaba’s move underscores both the potential of AI-driven growth and the risks of balancing innovation with profitability in an uncertain economic climate.
