<div id="readability-page-1"><div><div><p><strong>Alibaba Group Holding Ltd</strong>‘s (NYSE: BABA) (NYSE: BABAF) stealth AI expansion may be Wall Street's blind spot—but it's <strong>Nvidia Corp</strong>'s (NASDAQ: NVDA) margin moat that's directly in the crosshairs. CEO <strong>Eddie Wu</strong> has pledged to surpass the company's $53 billion AI investment as demand for compute skyrockets, setting up a clash that could echo Beijing's solar strategy a decade ago: flooding the market with cheaper supply, undercutting Western rivals, and rewriting the margin math.</p><ul> <li><strong>Track NVDA stock here.</strong></li> </ul><h2>Nvidia's Moat Under Siege</h2><p>Nvidia has enjoyed a golden era, selling high-end GPUs at luxury pricing that has driven its gross margins above 70%. However, insiders warn that Alibaba's scale-driven approach could erode those margins if cheaper AI compute saturates the market. This isn't without precedent.</p><p>In the late 2000s, U.S. and European solar firms operated at gross margins of 30–40%. After Chinese manufacturers like <strong>LONGi</strong> and <strong>Jinko Solar</strong> entered with massive subsidized capacity, industry margins collapsed into the 5–15% range within just a few years. Demand for solar exploded, but profits evaporated.</p><p>The parallel is clear: when China industrializes a high-growth sector, pricing power doesn't survive.</p><p><strong>Read Also: Nvidia’s Silicon Silk Road: From China’s Firewalls To Saudi Arabia’s Data Palaces</strong></p><h2>The Desperate Tie-Up: Physical AI</h2><p>Nvidia's answer may be its &#34;Physical AI&#34; strategy—a blend of hardware and services designed to deepen integration and prevent GPUs from becoming interchangeable parts. </p><p>But history shows that moats can get shaky once China plays the volume game. Just ask <strong>First Solar Inc</strong> (NASDAQ: FSLR), which saw its 40% margins shrivel to the low teens by 2013. Once commoditization takes hold, it's nearly impossible to claw back pricing power.</p><h2>Investor Takeaway</h2><p>Alibaba's AI surge isn't just about winning cloud market share in Asia—it could be the stealth margin killer for Nvidia's global business. </p><p>With $53 billion in spending echoing the solar playbook, investors betting on endless 70% gross margins for GPUs may be overlooking a structural risk.</p><p>The AI hardware wars are only just beginning, and if history repeats itself, the cheaper side usually wins.</p><ul> <li><strong>Nvidia Gives. Nvidia Gets. Nvidia Grows—Jensen Huang’s $100 Billion Brainwave</strong></li> </ul><p><em>Photo: Shutterstock</em></p></div></div></div>

<p>Alibaba's $53 billion investment in AI poses a significant threat to Nvidia's high margins, as the company aims to flood the market with cheaper AI compute. This strategy mirrors the past collapse of solar industry margins when Chinese firms entered the market. Nvidia's current high gross margins could be at risk if Alibaba's approach succeeds, potentially reshaping the competitive landscape in AI hardware. Investors may need to reconsider the sustainability of Nvidia's margins in light of this emerging competition.</p>

- Alibaba Group's AI expansion poses a potential threat to Nvidia's high margins, reminiscent of the solar industry's past.  
- CEO Eddie Wu's commitment to exceed a $53 billion AI investment could lead to market saturation with cheaper AI compute, impacting Nvidia's profitability.  
- Investors may underestimate the structural risks to Nvidia's margins as history suggests that when China enters a high-growth sector, pricing power diminishes significantly.

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Alibaba's $53 Billion AI Push Is The Threat Nvidia Can't Ignore