Alibaba Group stock tumbled Monday after the tech giant pledged to spend $52 billion on cloud-computing and AI infrastructure over the next three years.
The pullback for shares of the Chinese e-commerce and cloud-computing company comes after the stock rocketed more than 40% higher this month. Alibaba announced the plan in a blog entry published on its news site Monday.
"The investment, which exceeds Alibaba's total AI and cloud spending over the past decade, underscores the company's focus on AI-driven growth and its role as a leading global cloud provider," the Alibaba announcement said.
On the stock market today, U.S.-listed Alibaba stock fell more than 10% to close at 129.04.
Alibaba Cloud Revenue Accelerates
The big spending plans comes as investors are scrutinizing costs related to AI, particularly after China startup DeepSeek launched a powerful AI model it said required significantly less power and computing chips to train. It also follows news that President Donald Trump ordered the Committee on Foreign Investment in the United States to limit Chinese investments in technology and other U.S. sectors.
Alibaba said in its blog post Monday that it expects AI to "play an increasingly integral role across e-commerce, enterprise services, and consumer applications, enhancing efficiency, user engagement, and business innovation."
Outside of Monday's stock dip, investors have been rewarding the results of Alibaba's AI push. It is competing to provide the best AI model in China against DeepSeek as well as other China tech giants such as Baidu and WeChat-parent company Tencent.
Alibaba stock jumped after the company reported its fiscal third-quarter earnings on Thursday. The results beat expectations for earnings and sales. Revenue from Alibaba's Cloud Intelligence Group increased 13% year over year to 31.7 billion yuan (about $4.37 billion), compared to estimates of 9.8% growth.
Chief Executive Eddie Wu told analysts on the firm's earnings call last week that Alibaba would "aggressively invest in AI infrastructure" over the next three years, according to a FactSet transcript. The company said that AI-related product revenue in its cloud business grew by triple digits year over year for a sixth consecutive quarter.
On Jan. 29, Alibaba released an AI model it said outperforms the models of China-based rival DeepSeek. Alibaba's models are also comparable to "top tier models," the company said.
Two weeks later, Alibaba stock soared on news that Apple will be working with Alibaba to introduce AI features to iPhones in China.
Alibaba Stock: Technical Ratings
Entering Monday trading, U.S.-listed Alibaba stock had rallied 70% during the first two months of the year. The gains last week placed Alibaba stock at its highest value since November 2021.
Meanwhile, Alibaba stock has an IBD Composite Rating of 97 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Alibaba's IBD Relative Strength Rating was 97 out of 99. The RS Rating means that BABA stock has outperformed 97% of all stocks in IBD's database over the past 12 months.
