AI: Alibaba steps up on AI in China. RTZ #644

With the nonstop news of US companies spending billions and trillions on AI infrastructure capex in this AI Tech Wave, it’s easy to miss that a similar thing is going on in the rest of the world.

Particularly in China, which both on a top down and bottom up basis, its very much in an AI Space Race with the US, amidst global ‘threading the needle’ geopolitics around tech/AI trade curbs. With investors around the world piling in their respective countries and regions.

This comes up as one of the iconic tech companies in China, Alibaba, founded by Jack Ma, is racing to position itself as an AI First company, much like the Mag 7s in the US.

Bloomberg outlines the momentum in “Alibaba Plans to Spend $53 Billion on AI in a Major Pivot”:

• “The e-commerce firm is angling to become an AI company”

• “Firm to invest in AI infrastructure such as data centers”

“Alibaba Group Holding Ltd. pledged to invest more than 380 billion yuan ($53 billion) on AI infrastructure such as data centers over the next three years, a major commitment that underscores the e-commerce pioneer’s ambitions of becoming a leader in artificial intelligence.”

“The internet company co-founded by Jack Ma plans to spend more on its AI and cloud computing network than it has over the past decade. Alibaba envisions becoming a key partner to companies developing and applying AI to the real world as models evolve and need increasing amounts of computing power, the company said on its official blog.”

This puts Alibaba near the top of the list in terms of AI capex:

“That target marks one of China’s biggest AI infrastructure budgets, underscoring Alibaba’s growing ambitions in the field. But it comes at a time investors are pondering whether big tech firms are overestimating future demand for AI services, or the capital needed to create them.”

“This also sets a record for the largest investment ever by Chinese private enterprises in the field of cloud and AI hardware infrastructure construction,”

This of course blends into the global debate over AI infrastructure capex and eventual returns:

“Big tech firms from Meta Platforms Inc. to Amazon.com Inc. are pledging billions toward the data centers needed to train, develop and host AI services.”

“Wall Street has begun to question whether such investment is running ahead of reality, particularly after Chinese upstart DeepSeek unveiled a model trained for a fraction of the cost of many of its rivals. But many of the industry’s biggest names — including Nvidia Corp.’s Jensen Huang — continue to argue that AI will simply transform the tech landscape.”

Alibaba has its own AI narrative to build:

“Alibaba certainly falls in that camp. The Chinese company is now righting a business knocked off-kilter by a government clampdown that began in 2020, refocusing its ambitions on e-commerce and AI. Last week, Chief Executive Officer Eddie Wu declared that Artificial General Intelligence was now its primary objective, joining a race so far led by the likes of OpenAI and big US firms like Alphabet Inc.”

“While a milestone for China, Alibaba’s three-year timeline lags behind its US peers.”

And the US numbers are of course unprecedented:

“Microsoft for one expects to spend $80 billion this fiscal year on AI data centers, while Meta has earmarked some $65 billion for 2025. That’s in part because Alibaba is a relatively newer entrant to the field, though it’s operated an AWS-like platform globally for years. Chinese firms in general are also limited by US sanctions from buying the most expensive Nvidia AI chips for their data centers — a factor that curtails computing power but also helps cap costs.”

Meanwhile, Alibaba CEO Wu now Says AGI Is Now Company’s ‘Primary Objective’

“Still, investors have applauded Alibaba’s growing determination to compete in artificial intelligence. Wu’s reference to AGI — powerful, hypothetical AI systems that could emulate or match human thinking capabilities — is striking in the context of Alibaba’s traditional online retail business.”

As in the US, Alibaba also reported fast growing quarterly results:

“On Thursday, Alibaba posted its fastest pace of revenue growth in more than a year, underpinned by its two most important divisions. Joe Tsai and Wu — two of Ma’s most trusted lieutenants — took the helm of the company in 2023 and refocused investment on those spheres.”

“Alibaba has gained more than $100 billion of market value in 2025, though it’s still far from its pre-crackdown peak. Ma himself joined a select group of the biggest names in Chinese technology and business at a televised summit convened last week by Chinese President Xi Jinping — signifying Alibaba’s return to favor after years in the cold. The gathering featured entrepreneurs across a broad swath of industry, notably from the field of AI.”

Meanwhile, Alibaba has been very active on AI investments in China, building up its scale of operations:

“Since the advent of OpenAI’s chatbot, Alibaba has invested in a clutch of China’s most promising startups, including Moonshot and Zhipu. It prioritized the expansion of the cloud business that underpins AI development, slashing prices to win back the customers that fled during the turbulent years.”

And that helped Alibaba get the relationship with Apple for AI in China:

“It unveiled a Qwen model that performed well in benchmark tests and signaled the company’s growing relevance in the field. Apple Inc. is incorporating Alibaba’s AI technology into Chinese iPhones, a vote of confidence in its prowess.”

We’re going to hear similar lines of AI investment ramp up by the other big Chinese tech companies like Tencent, Baidu and others. For now, it’s Alibaba’s moment to step up in this AI Tech Wave. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)