TECH

Alibaba’s $53 Billion Bet on an AI and Cloud Expansion Windfall

Published: Feb. 25, 2025 3:48 a.m. GMT+8

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The logos for Alibaba’s cloud service, top, and the company's Qwen AI large language models. Photo: Bloomberg

Alibaba Group Holding Ltd. is making a record-breaking bet on artificial intelligence (AI) and cloud computing, announcing on Monday that it will inject more than 380 billion yuan ($53 billion) into cloud and AI infrastructure over the next three years — more than its total capital expenditure over the past decade.

The Chinese tech giant said in a statement that the investment marks the largest private-sector commitment to cloud and AI hardware in China.

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Alibaba plans to invest over 380 billion yuan ($53 billion) in AI and cloud computing infrastructure, marking the largest private-sector commitment in China.
CEO Wu Yongming emphasizes cloud computing's crucial role in AI, even with U.S. export restrictions, and foresees most AI tokens processed through cloud networks.
Alibaba Cloud's revenue has consistently grown, though profitability lags behind U.S. peers; investment aims to improve utilization and balance short-term depreciation costs against future growth.

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Who’s Who

Alibaba Group Holding Ltd.: Alibaba Group Holding Ltd. is investing over 380 billion yuan ($53 billion) into AI and cloud infrastructure over three years, marking its largest capital commitment in this sector. Despite U.S. chip export restrictions, Alibaba's cloud and AI strategies remain strong, focusing on infrastructure, foundational models, and business transformation. Alibaba Cloud's revenue grew 13% in Q4 2024, but profitability lags compared to U.S. counterparts. Heavy investments will impact short-term profits.

Alibaba Cloud: Alibaba Cloud is set to receive a $53 billion investment over three years, the largest private commitment to cloud and AI hardware in China. The focus will be on cloud and AI infrastructure, foundational AI models, and AI-driven business transformation. Despite revenue growth, it faces profitability challenges compared to U.S. rivals. Profits hinge on expanding AI use cases, with upcoming capital expenditures expected to affect short-term profitability. The unit's revenue grew 13% in Q4 2024.

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