Alibaba Group shares surged to their highest in nearly four years after revealing plans to ramp up AI spending past an original $US50 billion-plus target, joining US tech leaders pledging ever-greater sums toward a global race for technological breakthroughs. CEO Eddie Wu anticipates overall investment in AI accelerating to some $US4 trillion worldwide over the next five years, and in his opinion, Alibaba needs to keep up. The company will soon add to a plan laid out in February to spend more than 380 billion yuan ($US53 billion) developing AI models and infrastructure over three years.
- The markets loving companies writing large AI R&D cheques, historically large capex unsettles investors.
Their cloud division, which already operates services from the US to Australia, intends to launch its first data centres in Brazil, France and the Netherlands in the coming year. Wu made his projections while outlining plans to roll out Qwen models and “full-stack” AI technology, reflecting Alibaba’s growing ambitions to both develop services and the infrastructure, such as chips, that underpin the technology.
BABA shares closed up more than 8% this morning, great timing for Cathie Wood’s ARK funds, which recently bought ~$US16.3mn worth of Alibaba shares, marking their first investment in the company in about four years.
- We can see Alibaba trading well above $US200 through 2026: MM owns BABA in our International Equities Portfolio.
MM is long and bullish on BABA US
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