The race to build out data centers for artificial intelligence is worrying one billionaire.

Alibaba (BABA) chairman Joe Tsai said that AI data center construction may overtake demand for the technology and that the rush to set up server projects is being made without fully considering customers, according to Bloomberg.

“I start to see the beginning of some kind of bubble,” Tsai said during the HSBC (HSBC) Global Investment Summit in Hong Kong on Tuesday. “I start to get worried when people are building data centers on spec. There are a number of people coming up, funds coming out, to raise billions or millions of capital.”

Tsai reportedly added that some data center projects have started raising funding without customer contracts and that he’s “still astounded by the type of numbers that’s being thrown around in the United States about investing into AI.”

“People are talking, literally talking, about $500 billion, several hundred billion dollars,” Tsai said. “I don’t think that’s entirely necessary. I think, in a way, people are investing ahead of the demand that they’re seeing today, but they are projecting much bigger demand.”

Tsai’s warning about AI spending comes amid plans by major tech companies to spend tens of billions of dollars each on AI development and infrastructure this year. Altogether, Meta (META), Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) could spend a combined $320 billion on AI.

In January, Meta CEO Mark Zuckerberg said the company is building a data center with a capacity of more than two gigawatts — a site that could cover a large part of Manhattan.

Additionally, President Donald Trump announced a half-a-trillion-dollar joint venture for AI infrastructure in January, alongside OpenAI CEO Sam Altman, SoftBank (SFTBY) CEO Masayoshi Son, and Oracle (ORCL) chief technology officer Larry Ellison. The Stargate Project “intends to invest $500 billion over the next four years building new AI infrastructure for OpenAI in the United States,” the AI startup said in a statement. Stargate is starting with an initial $100 billion investment and counts OpenAI, SoftBank, Oracle, and Abu Dhabi-based AI investor MGX as initial equity funders.

Meanwhile, TD Cowen analysts said in a note in February that Microsoft had canceled data center leases worth “a couple of hundred megawatts” — potentially signaling an oversupply of AI infrastructure. In some cases, Microsoft said “facility/power delays” were a reason for termination, analysts said in the note, adding that Meta had previously used a similar justification to cancel data center leases.

Microsoft said in response that it is “well positioned to meet our current and increasing customer demand.”

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