Alibaba Group Chairman Joe Tsai cautioned against a potential bubble in data center construction, warning that the rapid expansion may outpace demand for AI services. Speaking at the HSBC Global Investment Summit in Hong Kong, Tsai noted that many projects are being built without clear customers, fueled by massive spending from big tech firms and investment funds.
Tech giants like Microsoft and SoftBank are pouring billions into Nvidia and SK Hynix AI chips, while Alibaba itself has pledged $52 billion over the next three years for AI development. However, Wall Street analysts are questioning the sustainability of these investments, especially as new AI models—like Chinese startup DeepSeek’s open-source technology—emerge at a fraction of the cost.
Tsai expressed concern over speculative data center projects raising funds without guaranteed demand. “I start to get worried when people are building data centers on spec,” he said.
Despite the warning, Alibaba is eyeing a 2025 resurgence, leveraging its Qwen-based AI platform to drive growth in e-commerce and cloud services. The company is undergoing a “reboot”, rehiring talent and investing in artificial general intelligence (AGI) to maintain its competitive edge.