Shares of Alibaba Group (BABA) are up nearly 10% after the Chinese technology giant said that it plans to spend more than $50 billion U.S. on artificial intelligence (A.I.) technologies.
Alibaba’s Chief Executive Officer (CEO) Eddie Wu said overall investment in A.I. is likely to exceed $4 trillion U.S. worldwide over the next five years and Alibaba needs to keep pace.
For that reason, Alibaba is planning to increase its capital expenditures on A.I. beyond an initial commitment of $50 billion U.S. over the next three years.
Wu said that Alibaba’s cloud division, which already operates in the U.S. and Australia, intends to launch its first data centres in Brazil, France, and the Netherlands in the next year.
The CEO added that Alibaba ultimately wants to develop both A.I. services and infrastructure, including the microchips and processors that underpin the technology.
“The industry’s development speed far exceeded what we expected, and the industry’s demand for AI infrastructure also far exceeded our anticipation,” said Wu at a conference in China.
As in the U.S., China’s largest technology companies are pouring billions of dollars into A.I. as they seek to build revolutionary new technologies.
Total capital expenditures on A.I infrastructure and services by leading Chinese tech firms could surpass $32 billion U.S. this year alone, up from $13 billion U.S. in 2023.
However, Wu and other technology CEOs have conceded that A.I. investments made today are unlikely to generate a meaningful financial return on investment.
Most analysts agree that A.I. technologies are still in their infancy.
Prior to today (Sept. 24), BABA stock had risen 92% this year to trade at $163.08 U.S. per share.
