TMTPOST -- Alibaba Group plans to spend more than US50 billion to ramp up artificial intelligence (AI) development and deployment of the technology.Generated by Alibaba QwenAlibaba announced plans to invest at least RMB380 billion (US$53 billion) over the next three years to advance its cloud computing and AI infrastructure, underscoring the company’s focus on AI-driven growth and its role as a leading global cloud provider, according to a statement by Alibaba’s Cloud unit on Monday.With this investment, Alibaba is scaling up its AI capabilities and cloud infrastructure to support the next wave of technological advancements, ensuring businesses and developers have the tools to innovate and grow, The statement said, without providing details about the investment plan.In their May 2024 shareholder letter, Alibaba Chairman Joe Tsai and CEO Eddie Wu outlined Alibaba’s strategic transition to a “user-first, AI-driven” approach, embedding AI across its ecosystem to enhance customer experiences, optimize business operations, and fuel long-termOn an earnings call last Thursday, Wu described AI as a “once-in-a-generation” opportunity, with Artificial General Intelligence (AGI) as the company’s primary long-term objective. Wu told analysts will scale up investments in three areas as part of its broader AI strategy over the next three years. First, Alibaba will aggressively invest in AI infrastructure. the company's planned investment in cloud and AI infrastructure over the next three years is set to exceed what it has spent over the past decade. Second, it will substantially increase research and development (R&D) investment in AI foundation models to maintain its technological leadership and drive the development of AI-native applications. Third, it will increase investment in AI application, R&D, and computing power and deeply integrate AI across its businesses. Wu emphasized that cloud computing remains Alibaba’s clearest revenue driver in AI, with demand for AI hosting services surging. Alibaba’s third fiscal quarter ended December 31 saw Cloud Intelligence Group, which houses Alibaba’s AI-related projects and hosts computing power for external clients, posted the fastest revenue growth in about two years.The cloud division brought RMB31.74 billion with a 13% YoY rise from September to December, more stellar than a 7% increase in revenue for the previous quarter. Alibaba mainly attributed the momentum to a double-digit public cloud revenue growth, including the growing adoption of AI-related products. Notably, AI-related product revenue maintained triple-digit year-over-year growth for the sixth consecutive quarter.Alibaba’s capital expenditure (CapEx) surged 260% YoY to RMB31.78 billion for the December quarter, up 80% from the previous quarter. The free cash flow, a non-GAAP measurement of liquidity, shed 31% YoY to RMB56.54 billion, mainly due to the increase in expenditure related to investments in cloud infrastructure.Responding to a question about how the planned CapEx will impact overall profitability, Wu clarified the size of CapEx could be fluctuate within each year on a quarter-by-quarter basis over the next three years given the time that it takes for supply chains to provide what’s need,as well as for the internet data centers (IDCs) to get set up. But on a YoY basis,Wu noted the annual level of CapEx will be more or less equal across these three years. The next three years will likely be the single period in which Alibaba will be making the most concentrated and highest level of investments in building out its cloud and AI-related infrastructure, Wu said. He admitted the hardware infrastructure will have an impact in terms of depreciation, but observed the company expected huge demand for take-up on the part of both internal and external customers.Goldman Sachs analysts hiked their 12-month target price by nearly 37% to US$160/HK$156. The change of target price reflected stabilizing domestic e-commerce profits and faster Alibaba Cloud revenue growth of 23%/25% for the fiscal year 2026/2027, compared with the previous forecast of a 13%/14% growth, according to a note on Friday. Morgan Stanley analysts led by Gary Yu raised their rating for Alibaba to Overweight on Sunday, and their target price was also lifted to US$180 from US$100, representing an increase of 80%. The analysts expected Alibaba Cloud revenue will double in the coming three years, from RMB118 billion for the current 2025 fiscal year to RMB240 billion in fiscal year 2028. The EBITA margin of the cloud division is expected to increase to around 35% from 20% in the same three-year period.更多精彩内容，关注钛媒体微信号（ID：taimeiti），或者下载钛媒体App