Alibaba Group Holding is spearheading China's Big Tech sector in the race for global leadership in artificial intelligence (AI) technology and infrastructure with its spending plan, competing with US giants like Apple and Microsoft for first-mover advantage, analysts said.

The e-commerce leader's 380 billion yuan (US$52.4 billion) capital expenditure for computing resources and AI infrastructure is the biggest allocation yet by a private Chinese entity, a move that is likely to draw local peers like Tencent Holdings and ByteDance into the fray, they added.

Alibaba, based in Hangzhou in eastern Zhejiang province, owns the South China Morning Post.

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The AI-focused spending budget, triggered by quick availability of open-source large language models (LLMs) for businesses to adapt, mirroring similar but bigger plans in the US amid heightened tech war and geopolitical tensions. The massive investment in AI infrastructure may be about "democratising generative AI [GenAI] to the local markets", according to Su Lian Jye, chief analyst at research firm Omdia.

"As China and the US are the two largest single markets, investing in AI data centres allows vendors like Alibaba, Apple, and OpenAI to tap into the economies of scale and offer their services at a much cheaper cost," Su added. "Whichever market can accelerate GenAI adoption and innovation will have an upper hand in the tech race."

Apple announced a US$500 billion four-year budget on Monday to boost its computing resources and other facilities, while Microsoft last month allocated more than US$80 billion for data centres this financial year. Amazon earlier this month said that it would spend US$100 billion in 2025 to capture "once-in-a-lifetime" opportunities in AI.

US President Donald Trump last month unveiled the Stargate Project, a mega AI infrastructure project being jointly developed by Japan's most aggressive tech investor SoftBank group and OpenAI. The project's initial US$100 billion investment outlay could be upsized to US$500 billion over the next four years.

Alibaba is among the world's top players in AI model development, with Qwen being one of the most widely adopted open-source models. The company is poised to unveil its next reasoning model called QwQ-Max, which could rival other LLMs like OpenAI's o1 and DeepSeek's R1, analysts said.

With Alibaba's AI capabilities and its extensive client base, the company is preparing for surging demand by budgeting an amount for the next three years that exceeds its total spending on AI infrastructure over the past decade. To reflect the market's underlying confidence in its AI bets, investors have pushed its share price up by 60 per cent this year, boosting its market value by more than US$120 billion.

Alibaba Cloud has also expanded its footprint in key overseas markets, including Thailand and Mexico, jostling for global market share against Amazon Web Services, Microsoft's Azure and Google Cloud.

Alibaba's investment plan might encourage its peers in China to step up capital expenditure as well, said Kenny Ng, a strategist at Everbright Securities International. They are eyeing the first-mover advantages "in the initial stage of artificial intelligence development", he added.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.

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