Some AI-related bets are speculative and creating a bubble, Alibaba’s Tsai says
‘People are talking literally about US$500 billion, several US$100 billion [projects]. I don’t think that is entirely necessary,’ Tsai says
Published: 2:35pm, 25 Mar 2025
Alibaba Group Holding chairman Joe Tsai is raising some alarm bells on global tech investments to support advances in artificial intelligence (AI) services, citing a possible bubble in speculative bets on data-centre construction as an example.
A rush among global tech leaders and investment funds into infrastructure projects to support AI’s computational, storage and energy needs is worrisome, he said at the HSBC Global Investment Summit in Hong Kong on Tuesday.
“I start to see the beginning of some kind of bubble,” he said, adding that some projects started to raise funds without having secured any takers to use the data centres. “I start to get worried when people are building data centres on speculation.”
Tsai pointed to a couple of initiatives in the US including the Stargate Project, a joint venture between US start-up OpenAI and Japanese conglomerate SoftBank that includes a pledged investment of US$500 billion over the next four years. AI investments in the US seemed to be outpacing current demand, he said.
Alibaba has pledged to invest US$52 billion over the next three years in its ‘all-in on AI’ strategy. Photo: AFP
“I’m still astounded by the type of numbers that [are] being thrown around in the US about investing into AI,” he said. “People are talking literally about US$500 billion, several US$100 billion [projects]. I don’t think that is entirely necessary.”
Alibaba, which owns the South China Morning Post, is also raising its bets in the industry. Last month, it pledged to invest at least 380 billion yuan (US$52 billion) in cloud computing and AI infrastructure over the next three years as part of its “all-in on AI” strategy. The spending plan is the biggest computing project by a single private business in China.
Despite his concerns, Tsai said the broader tech industry was excited about the latest successes and the future proliferation of AI. Chinese AI start-up DeepSeek’s breakthrough in January, has helped make AI more accessible to the public with its open source approach and cheaper models.
“Alibaba had always espoused the open source movement for AI because we believed that if you open source, it would actually proliferate the usage of AI,” he said.
Business confidence has been growing since President Xi Jinping met the nation’s top tech leaders and rising entrepreneurs at a high-profile symposium in Beijing last month, which should result in more hirings in the industry, Tsai added.
“We have seen a very clear sign of business entrepreneurs becoming more confident, since President Xi met with private businesses,” he said. “That was a very clear signal to the business community: go ahead, reinvest in your business and also go out and hire people.”
Alibaba, which operates the Tmall and Taobao e-commerce platforms, plans to expand its headcount after trimming its workforce for the past 12 quarters, according to Tsai. He suggested that Alibaba would start to reboot and rehire.
“Once you hire people, that gives you job security and income growth. That will translate from business confidence into consumer confidence,” he said. Tsai said he was optimistic about the future, with the real estate sector hitting a bottom at some point and the stock market rallying again.
Mark Tucker, group chairman of HSBC, echoed the sentiment in his opening speech at the investment summit
“In China, policy is shifting to more proactively supporting consumption,” Tucker said. “There are detailed underlying plans that are both cyclical and structural in nature, focusing on income generation and wealth creation, as well as enhancing social welfare for sustainable growth.”
Tucker added that China’s economy continued to transform, resulting in material developments like DeepSeek and stock market rallies.
“The real opportunity is for China to continue with its process of opening up its market,” he added. “Hong Kong, as the main superconnector between mainland China, Asia and the rest of the world, has a very important role to play.”
Aileen Chuang
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Aileen has reported in Taiwan, Hong Kong and the United States for media organisations such as Loan Pricing Corp, Risk.net, the Associated Press and National Public Radio. She is from Taiwan and holds a master of science degree in journalism from Northwestern University.
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