Get Access to the Editor’s Digest at No Cost
Join Roula Khalaf, Editor of the Financial Times, as she picks out her top stories in a weekly newsletter you’re sure to enjoy.
Last Friday was a remarkable day for Alibaba’s shares listed in Hong Kong, which surged 11.7%. The jump came after the Chinese e-commerce powerhouse announced plans for a robust investment in artificial intelligence over the upcoming three years.
Eddie Wu, Alibaba’s chief executive, shared in a Thursday call with analysts that the company is set to amplify its spending on cloud and AI infrastructure to levels surpassing its expenditures from the last decade. While he held back on divulging exact figures, it’s clear the commitment is significant.
In 2024 alone, Alibaba funneled Rmb72.5bn ($10bn) into capital expenditures, a considerable leap from Rmb24bn the previous year. The funds primarily supported acquiring processors and infrastructure vital for training advanced language models.
Wu outlined Alibaba’s foremost goal as the pursuit of artificial general intelligence—which involves AI that mirrors human critical thinking abilities. In a move to keep pace with the likes of DeepSeek and OpenAI, the company is gearing up to introduce a deep reasoning model adept at tackling intricate problems.
The timing of this heightened AI investment coincides with Alibaba’s impressive revenue uptick, an 8% boost bringing them to Rmb280bn in the final 2024 quarter—their most rapid growth in over a year.
Markedly contributing to this growth was their cloud segment, which saw a 13% climb to Rmb31.7bn. On the US stock market, Alibaba shares enjoyed a more than 9% rise earlier in the day.
Year-to-date, Alibaba’s stock price has climbed over 50%, a rise fueled by a DeepSeek-led AI wave among Chinese tech firms, and its strategic collaboration with Apple to integrate AI features into iPhones in China.
Adding to the momentum is the return of Jack Ma, Alibaba’s co-founder, whose presence was noted at a significant meeting between key Chinese entrepreneurs and President Xi Jinping on Monday.
This invitation marks a turning point, signaling the rehabilitation of China’s most renowned entrepreneur, who had faced governmental scrutiny in 2020.
Alibaba’s international e-commerce sector experienced a 32% growth to Rmb37.8bn, propelled by its AliExpress platform, which mirrors the success of platforms like Temu.
Domestically, the e-commerce segment witnessed a 5% rise, reaching Rmb136bn in the fourth quarter. This growth was powered by merchant charges on mainstays like Taobao and Tmall.
Li Chengdong from the ecommerce think-tank Haitun noted, “Alibaba’s domestic ecommerce sales have halted their decline, achieving their goal to stabilize the business.”
In striving for competitive advantage, Alibaba has been pouring resources into Chinese AI start-ups, such as Moonshot and 01.ai, leveraging their expertise to outmaneuver competitors like Baidu and ByteDance.
Over the past year and a half, Alibaba has also embraced open-sourcing several large language models to bolster its cloud realm and attract developers.
Nevertheless, the company faces stiff competition from heavyweights like Huawei, eager to tap into the AI surge.
Forrester’s principal analyst, Charlie Dai, observed, “In the grand scheme, technology leaders with robust R&D capabilities, including Alibaba, Baidu, Tencent, and Huawei, stand poised to gain from AI’s expanding market embrace.”
