This planned investment surpasses Alibaba's total expenditure on AI infrastructure over the past ten years and represents half of the initial US$100 billion investment in the Stargate AI initiative promoted by the United States.
During a recent conference call with analysts, CEO Eddie Wu Yongming emphasized the company's intention to "aggressively invest" in AI and cloud computing infrastructure in the coming years.
As the owner of the South China Morning Post, Alibaba has highlighted that these plans demonstrate its commitment to AI-driven growth and its ambition to be a leading global cloud provider.
The announcement of Alibaba's investment has attracted significant national attention, coinciding with a surge in interest in AI technologies following the success of DeepSeek's models in recent months. The official Xinhua news agency was the first to report on Alibaba's investment strategy on Monday.
In its latest earnings report, Alibaba revealed better-than-expected profits and revenue for the December quarter, which has heightened investor enthusiasm. Alibaba Cloud, a crucial growth segment for the company, experienced a 13 percent year-on-year revenue increase, reaching 31.7 billion yuan, fueled by triple-digit growth in AI-related product revenue for the sixth consecutive quarter. This marked the fastest quarterly growth for the unit in three years.
According to analysts at Morgan Stanley, Alibaba is well-positioned to seize the AI cloud opportunity with this new investment plan. They have raised their price target for the stock, forecasting that Alibaba Cloud's revenue could double over the next three years, potentially reaching 240 billion yuan by 2028.
Alibaba's shares, listed in Hong Kong, fell by 2.5 percent to HK$135.1 on Monday morning, although they remain near their highest point since late 2021. The stock had previously surged by 15 percent on Friday.
In recent weeks, the AI capabilities of China's largest e-commerce and cloud services company have garnered significant global attention. This interest peaked when it was announced that Apple selected Alibaba as one of its AI partners in mainland China for the Apple Intelligence feature on iPhones.
Developers are increasingly recognizing the strength of Alibaba's Qwen models, utilizing the company's technology as a foundation for a growing number of open-source models. Notably, several of the top 10 models on the developer platform Hugging Face were trained and developed using Qwen.
Additionally, Alibaba has hinted at the upcoming launch of a new reasoning AI model based on its Qwen 2.5-Max model, which is currently closed-source. The company has made favorable comparisons between this model and those from DeepSeek. This development is anticipated to provide developers with an alternative to the widely adopted open-source DeepSeek-R1 reasoning model, which has gained traction among cloud providers since its introduction last month.