Why it is important: Alibaba’s actions reflect the escalating global AI arms race, where capital, innovation, and self-reliance are critical to maintaining retail competitiveness.

Alibaba’s latest surge in share price is fueled by a series of bold moves to cement its position as a leader in artificial intelligence and cloud technology. The company’s $3.2 billion bond raise is earmarked for expanding its AI infrastructure, while the launch of advanced Qwen-series models demonstrates its commitment to competing with global tech giants. These developments have shifted investor attention away from concerns about price wars in food delivery and toward Alibaba’s long-term technology strategy. The company is also investing in in-house chip development, aiming to reduce reliance on foreign suppliers and strengthen its technological independence. Despite the optimism, there are lingering questions about the profitability of such large-scale AI investments, as many in the industry have yet to see substantial returns. Nevertheless, Alibaba’s aggressive approach signals a new phase in the global race for AI dominance, with implications for the future of retail and technology.

IADS Notes: Alibaba’s recent stock surge and investor optimism are rooted in its aggressive push into artificial intelligence, as evidenced by its $52 billion AI investment announced in February 2025. This strategic pivot is supported by a $5 billion bond raise in November 2024, underscoring the scale of capital required to compete in the global AI arms race. The company’s consolidation of e-commerce operations under Jiang Fan, also in late 2024, reflects a direct response to intensifying competition from JD.com and Meituan, with Alibaba leveraging both technological innovation and price incentives to defend its market position. However, the industry faces a critical challenge: while AI investment is soaring, only a quarter of companies are realising meaningful value, raising questions about the sustainability of current strategies and the risk of an AI investment bubble, as highlighted by BCG in January 2025. Alibaba’s move to develop in-house chips and proprietary AI platforms, as reported in January 2025, further signals a drive toward technological self-reliance, positioning the company as a formidable global competitor while reducing dependence on foreign technology.

Alibaba’s shares soar after investors buy into big AI moves