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Alibaba to invest over $53 billion in AI over next 3 years in response to Trump's Stargate
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  • Alibaba to invest over $53 billion in AI over next 3 years in response to Trump's Stargate

Alibaba to invest over $53 billion in AI over next 3 years in response to Trump's Stargate

FP Tech Desk • February 24, 2025, 11:31:55 IST
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Alibaba’s cloud business has been seeing steady growth, with revenue climbing 13 per cent year-over-year to $4.35 billion in the last quarter. AI-related product revenue has surged for six consecutive quarters, recording triple-digit growth

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Alibaba to invest over $53 billion in AI over next 3 years in response to Trump's Stargate
Alibaba has been experiencing a rapid surge in demand for AI-powered solutions, with Wu revealing that since the Chinese New Year, approximately 60-70% of new demand has been for inference workloads—an essential component of AI model deployment. Image Credit: Reuters

The Alibaba Group is making a massive bet on artificial intelligence, announcing plans to invest more in cloud and AI infrastructure over the next three years than it has in the past decade. This ambitious move comes amid growing global competition in the AI space, particularly following the US government’s AI initiatives under Donald Trump’s Stargate project.

The Chinese e-commerce and tech giant revealed its intentions during its Fiscal Year 2025 Q3 earnings call, with CEO Eddie Wu emphasising that the AI era presents a major opportunity, demanding large-scale infrastructure expansion.

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A record-breaking AI investment

While Alibaba had previously hinted at expanding its AI investments, it had not disclosed a specific figure until now. The company’s planned $53 billion investment over three years marks its largest-ever AI and cloud-related spending spree. Wu described this as the most concentrated and significant investment period in Alibaba’s history, with the funds being fairly evenly spread over the three years.

The company’s cloud business has been seeing steady growth, with revenue climbing 13 per cent year-over-year to $4.35 billion in the last quarter. AI-related product revenue has surged for six consecutive quarters, recording triple-digit growth. In contrast, the previous quarter had seen a 7 per cent year-over-year increase in revenue, highlighting the acceleration of AI demand.

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Alibaba’s CFO Toby Xu attributed the strong financial performance to a shift towards higher-margin public cloud products and improved operational efficiency. However, he acknowledged that increasing investments in customer growth and technology would continue to impact overall costs.

AI demand driving business expansion

Alibaba has been experiencing a rapid surge in demand for AI-powered solutions, with Wu revealing that since the Chinese New Year, approximately 60-70 per cent of new demand has been for inference workloads—an essential component of AI model deployment. He expressed confidence that this trend would help the company expand its customer base and industry coverage, ultimately boosting profit margins in its AI services.

The strategic push into AI has already paid off for Alibaba, with its stock price rising more than 68 per cent this year. The company has been attracting investors with a series of high-profile deals, solidifying its position as a leader in China’s AI race.

A growing AI battle in China

Alibaba isn’t the only Chinese tech giant aggressively investing in AI. ByteDance, the owner of TikTok, has reportedly allocated over 150 billion yuan ($21 billion) for capital expenditure this year, with a large portion dedicated to AI development.

China’s AI sector is heating up as companies race to establish dominance in cloud computing and machine learning. With Alibaba ramping up investments and competitors like ByteDance also making bold moves, the next few years are set to be critical in shaping the future of AI in China and beyond.

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