Alibaba officially announces an increase! The company announced that it will invest over 380 billion yuan in cloud and AI infrastructure, escalating the domestic AI tug-of-war.
According to Wall Street News, Eddie Wu, CEO of Alibaba Group, announced on February 24 that over the next three years, Alibaba will invest more than 380 billion yuan to build cloud and AI hardware infrastructure, exceeding the total of the past decade (approximately 300 billion yuan). This also sets a record for the largest investment ever made by a private enterprise in China in the field of cloud and AI hardware infrastructure construction.
This investment by Alibaba comes after two significant events. First, the explosion of the domestic AI industry; second, the convening of a symposium for private enterprises. Eddie Wu stated:
<blockquote>
“The AI explosion far exceeds expectations, and the domestic technology industry is in its infancy with enormous potential. Alibaba will spare no effort to accelerate the construction of cloud and AI hardware infrastructure, promoting the development of the entire industry ecosystem.”
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<h2>Alibaba's major layout, previously Morgan Stanley and Goldman Sachs significantly raised Alibaba's target price</h2>
On the 23rd, Morgan Stanley's Gary Yu team released a research report, significantly upgrading Alibaba's rating to &#34;Overweight,&#34; raising the target price from $100 to $180, with a high-end valuation reaching $300. It is expected that Alibaba Cloud's revenue will double in three years, growing from 118 billion yuan in the 2025 fiscal year to 240 billion yuan in the 2028 fiscal year. The EBITDA profit margin of Alibaba Cloud is expected to increase from approximately 20% in the 2025 fiscal year to about 35% in the 2028 fiscal year.
In the basic scenario, Morgan Stanley raised Alibaba's target price to $180 (previously $100), corresponding to a price-to-earnings ratio of 16.6 times for the 2027 fiscal year. In the high-end scenario, the target price reaches $300, with Alibaba Cloud valued at $100 per share.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/13b6aeb5-4b56-4564-850d-8beac864c16c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/13b6aeb5-4b56-4564-850d-8beac864c16c.png"/>
Previously, Goldman Sachs significantly raised Alibaba's 12-month target price to $160/156 HKD, an increase of over 36% from the previous $117/114 HKD. Goldman Sachs believes that Alibaba's better-than-expected cloud revenue growth and capital expenditures have positively impacted the demand and supply dynamics of China's data center industry, potentially leading to a revaluation of the industry.
Last week, Alibaba's third-quarter financial report showed that the company's capital expenditures reached 31.8 billion yuan, an increase of 80% quarter-on-quarter. This was mainly used for the expansion of cloud computing infrastructure, technology research and development, and the exploration of emerging markets.
In the subsequent conference call, Eddie Wu stated that Alibaba will continue to increase investment in AI and cloud computing infrastructure, and it is expected that the investment in cloud and AI infrastructure over the next three years will exceed the total of the past decade:
<blockquote>
&#34;Overall, the next three years will be the largest and most concentrated cloud construction period in Alibaba Group's history. Therefore, the capital expenditure during this concentrated construction period will have a certain impact on hardware amortization and other aspects. However, given the current strong user demand and the forecast for the industry's future, the Group believes that the infrastructure investments will soon be absorbed by the demands of internal and external customers.&#34;
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Alibaba announced that it will invest over 380 billion yuan in cloud and AI infrastructure construction over the next three years, setting a record for the largest investment by a private enterprise in China in this field. CEO Eddie Wu stated that the explosion of the AI industry has exceeded expectations, and Alibaba will accelerate infrastructure construction to promote the development of the industry ecosystem. Meanwhile, Morgan Stanley and Goldman Sachs have significantly raised Alibaba's target price, expecting Alibaba Cloud's revenue to double within three years, and EBITDA profit margins to improve significantly

- Alibaba Group announced an investment exceeding 380 billion yuan in cloud and AI infrastructure over the next three years, surpassing the total of the past decade.  
- This investment follows significant developments in the domestic AI industry and a recent meeting of private enterprises, with CEO Wu Yongming emphasizing the potential of the tech sector.  
- Analysts from Morgan Stanley and Goldman Sachs have raised Alibaba's target prices significantly, reflecting expectations of substantial revenue growth for Alibaba Cloud and a positive impact on the data center industry.

Spending 380 billion to set a record! Alibaba announces continued investment in cloud and AI infrastructure over the next three years