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Published on
February 24, 2025
5 min read
Alibaba’s $53 Billion AI Investment Plan Speculative and Risky, Analysts Say
Chinese tech giant Alibaba has committed to invest more than $53 billion in the AI industry over the next three years, Yahoo Finance has reported. Alibaba’s AI investment will focus on establishment of infrastructural facilities like data centers. This investment underscores Alibaba’s ambition of becoming a leader in the AI industry.
A Speculative Move
Founded by Jack Ma, the Chinese tech company invested more on Alibaba cloud computing network in the last decade. As AI models evolve and increase computing power, the tech giant’s goal is to become a major partner for companies that develop and apply AI in the real world. Analysts see Alibaba’s decision to invest in AI infrastructure as risky and highly speculative.
“Alibaba’s confirmed plans to invest at least $53 billion over the next three years is a speculative, risky gamble in the pursuit of AGI. Achieving AGI – the ability to mimic human levels of intelligence – would require a significant technological breakthrough. It’s not clear whether the current generation of models can achieve AGI, with any payback an uncertain and indistinct prospect,” Analysts Jasmine Lyu and Robert Lea said.
Alibaba’s AI investment is one of the largest AI infrastructural budgets in China. However, the announcement comes at a time when investors are wondering whether funding estimates by big techs or projections of future demand for AI services are too high. Though Alibaba’s funding commitment represents a major milestone for China, its three year timeline is still behind US rivals. Microsoft is looking to invest $80 in AI data centers this year.
Meta has also allocated $65 billion to the AI industry in 2025. Alibaba has been running AWS-like platforms across the globe for years now, but its entry into the AI field is relatively new. Generally, Chinese companies have been curtailed by US sanctions that deny them access to advanced Nvidia AI chips to power their data centers.
Largest Chinese Investment
On February 21, analysts from TD Cowen said that Microsoft was in the process of terminating leases for significant data center capacity in the US. This step by the Windows makers is a classic example of the concerns it has on whether it’s setting up AI computing infrastructure that it will require in the long run.
“This also sets a record for the largest investment ever by Chinese private enterprises in the field of cloud and AI hardware infrastructure construction,” Alicia Yap, an Analyst at Citigroup said.
Many US big techs, including Amazon and Meta, have pledged to invest billions of dollars towards establishment of data centers that are required to develop, train, and host AI models. Investors in Wall Street have started questioning whether these investments are realistic, especially after the emergence of DeepSeek whose researchers claim was developed at a fraction of the cost that big techs spend. Big wigs like Nvidia hold that AI will change the global tech landscape. Alibaba appears to agree with this position.
Improving Performance
Investors have appreciated Alibaba’s AI strategy and its determination to join the artificial intelligence race. On February 20, the company reported the highest revenue growth in over a year. Alibaba’s market valuation has gained over $100 billion in 2025. Its founder, Jack Ma was among the few top tech executives who participated in a televised symposium hosted by President Xi Jinping last week.
Alibaba’s participation in this meeting marks Alibaba’s return to favor with the Chinese government following years in the cold. The Chinese firm is reviving its business following a government crackdown that started in 2020. Alibaba is doing this by refocusing its ambition on AI and ecommerce. The company has joined the AI race that has been dominated by big US companies like Google and OpenAI.
Last week, Alibaba CEO Eddie Wu announced that the company’s current goal is Artificial General Intelligence. The summit was attended by entrepreneurs from different tech industries, including AI, electric vehicles, and robotics. Since ChatGPT launched, Alibaba has made investments in a number of promising startups in China. These include Zhipu and Moonshot. The tech giant has prioritized expansion of its cloud computing business, where its AI development initiatives are hosted.
