Alibaba (BABA) stock is falling 7% after the China-based tech conglomerate disclosed that it would spend at least 380 billion yuan or $52.44 billion on cloud computing and AI infrastructure in the next three years.

More About BABA's Initiative

The amount that BABA plans to invest in cloud computing and AI infrastructure reportedly exceeds the total that it had spent on these areas over the last ten years.

A computer engineer seated in front of several connected consoles, illustrating the depth of cloud services offered by the company.

The initiative comes after BABA CEO Eddie Wu, on the firm's last earnings call, referred to AI as a “once-in-a-generation” technology and called Artificial General Intelligence (AGI) the company's primary target in the long term. Machines that achieve AGI can think, learn and act like humans.

Although BABA is currently benefiting financially from AI's growth primarily through higher cloud-computing revenue, the company plans to also utilize the technology in its -commerce, enterprise services, and consumer applications.

BABA's Achievements in AI

The sales of the conglomerate's Cloud Intelligence Group jumped 11% last quarter versus the same period a year earlier, while the revenue generated by its AI-related products soared at least 100% year-over-year for the sixth straight quarter.

On Feb. 12, investment bank Jefferies raised its price target on BABA to $150 from $144, stating that its Qwen AI system powers a large percentage of the leading open-source large language models. Additionally, Qwen's performance has surpassed expectations in a number of areas, according to Jefferies, which kept a Buy rating on the shares.

While we acknowledge the potential of BABA, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.