They can’t keep getting away with this… 

If you missed Alibaba’s face-melting run up today… Well, I’ll save you the Google search and give you the lowdown. Simply put, Alibaba decided its $53B AI budget wasn’t suicidal enough, so Eddie Wu stood on stage in Hangzhou and promised to spend even more. That’s it. That’s the news, and the stock ripped to its highest since 2021, presumably because nothing gets investors more hot and bothered than the phrase “raise AI investment.” 

Live look at Wu after saying the line…

(Source: Giphy) 

With that said, Wu claims global AI spending will hit $4T in the next five years, and Alibaba’s not about to get lapped by Tencent or Baidu. So now the company’s building new data centers in Brazil, France, and the Netherlands, rolling out bigger Qwen models, and pretending its in-house “T-Head” chips can actually replace Nvidia silicon. Spoiler: they can’t. But sanctions mean Beijing tech has to play DIY semiconductor engineer while Jensen Huang smokes cigars and counts money.

(Source: IBD) 

However, the AI frenzy has already doubled Alibaba’s stock this year. The cloud arm — the only division still growing like it has a pulse… posted a 26% sales jump and triple-digit growth in AI products. State media says China Unicom is buying Alibaba’s chips. Which sounds impressive until you remember that telcos in China don’t really “buy” things… they’re told what to buy. #communism. 

And yet, investors don’t care one bit. The second Wu said “we’re raising our AI budget,” everyone ignored the geopolitical handcuffs and started treating Alibaba like it was Nvidia 2.0. Chinese chipmakers ACM and NAURA spiked double digits on the news. Wall Street heard “$50B more capex” and immediately reached for the Kleenex. The reality is though, Alibaba isn’t building the future of AI. It’s paying a protection fee to stay in the hype cycle. The spending keeps the stock running, keeps the Party happy, and maybe buys them a seat at the grown-ups’ table when the West divvies up AI spoils.

(Source: Giphy) 

But the actual returns tho? TBD. At best, hey’re building data centers that will run out of GPUs before they can even boot. At worst, they’re torching tens of billions to act like Nvidia while Nvidia, Microsoft, and Meta keep chanting “U.S.A.”. But hey, apparently fiscal self-immolation in the name of AI is the new drug and investors love it. Meaning, if/when the AI bubble does burst, I promise the fallout will be exponentially more spectacular because of this Alibaba move. Until next time, friends…

At the time of publishing, Stocks.News holds positions in Meta and Microsoft as mentioned in the article.