Chinese e-commerce giant Alibaba Group is making its boldest tech move yet, pouring a staggering $53 billion (£41.9bn) into AI and cloud computing over the next three years—more than it spent on these sectors in the past decade combined.
The announcement comes as Chinese tech stocks rally, fueled by strong earnings and renewed investor confidence. But despite the AI buzz, Alibaba’s shares dipped 2% on Monday morning.
The timing of Alibaba’s move isn’t coincidental as a recent meeting between Chinese President Xi Jinping and Alibaba co-founder Jack Ma has raised hopes that Beijing will throw more support behind its tech giants.
CEO Eddie Wu says AI is at the heart of Alibaba’s future, touting its ability to “mimic human labour” and transform industries. That, of course, means an urgent need for powerful cloud infrastructure to handle the flood of AI-generated data.
Alibaba plans to embed AI across its businesses, from e-commerce to enterprise applications, streamlining operations and supercharging customer experiences. TikTok owner ByteDance is also ramping up AI investments, as China races to close the gap with the West.
Dodging Western roadblocks?
With the U.S. tightening restrictions on Chinese tech, Alibaba and its peers are turning to open-source AI to sidestep potential Western barriers. This approach enables them to develop AI solutions at a fraction of the cost of their American rivals.
The strategy also makes Alibaba an attractive ally for foreign firms. Companies like Apple could tap into Alibaba’s cloud infrastructure to deploy AI services in China while staying compliant with local regulations, a potential game-changer for navigating the country’s tricky tech landscape.
Alibaba’s latest earnings show the AI push is already paying dividends. Fourth-quarter revenue hit ¥280.2bn (€36.96bn), up 8% year-over-year, while net income soared to ¥48.9bn (€6.45bn).
Wu credits the company’s “user first, AI-driven” strategy for the results, with AI-related cloud revenue surging for the sixth consecutive quarter.