Alibaba Group’s Chief Executive Officer, Eddie Wu, has openly dismissed the increasingly common notion that the artificial intelligence sector is experiencing a speculative bubble. Instead of showing restraint, he reaffirmed that the company intends to intensify its financial commitment toward AI development. During Alibaba’s second-quarter earnings call on Tuesday, Wu emphasized that, from the company’s perspective, there is little evidence suggesting the existence of an ‘AI bubble.’ In his view, the market’s current trajectory reflects genuine and accelerating demand rather than overinflated hype.
Wu explained that Alibaba is currently struggling to keep up with the unprecedented growth in client needs. The company’s capacity to deploy new servers, he noted, is trailing behind the rapidly expanding appetite for computational resources. This imbalance, he warned, is likely to persist: over the next three years, AI resources are projected to remain in short supply. Such scarcity, he implied, underscores the structural and sustained nature of demand rather than the characteristics of an unsustainable surge.
Far from stemming from exaggerated market expectations or speculative enthusiasm, this demand, according to Wu, is rooted in concrete, real-world adoption of AI technologies across multiple sectors of the economy. Companies are employing AI tools in numerous domains — from product design and development to manufacturing optimization and corporate support operations. This widespread integration demonstrates that artificial intelligence has evolved from an experimental novelty into a vital component of modern economic infrastructure. As a compelling example of this uptake, Wu referenced the company’s Qwen application, which was launched only a week prior and astonishingly surpassed ten million downloads within its first seven days on the market.
Financially, Alibaba continues to show notable resilience despite substantial reinvestments in technology. For the quarter ending on September 30, the corporation reported 247.8 billion yuan in revenue, equivalent to approximately $34.8 billion at the time, marking a 5% increase compared with the same period a year earlier. However, profitability took a significant hit as heavy spending on AI development and commercial initiatives elevated costs dramatically. Net income declined by 53% year-over-year to 20.6 billion yuan, a reduction primarily attributed to diminished income from operations. The company also faced escalating marketing and sales expenses, which more than doubled from last year, revealing the magnitude of its commitment to expanding its AI-driven product ecosystem.
Among Alibaba’s divisions, the cloud computing arm — which houses the Qwen platform — emerged as the primary driver of growth. The unit reported a robust 34% increase, reaching 39.8 billion yuan in revenue. This surge was fueled largely by the growing popularity of public cloud services and the swift adoption of AI-oriented products and solutions integrated into Alibaba’s technological framework. Wu credited this trend to the increasing reliance of businesses on scalable computing power and intelligent automation.
Looking ahead, Wu declared that Alibaba intends to continue investing ‘aggressively’ in AI infrastructure to meet global demand. The company had previously announced, in February, a plan to allocate 380 billion yuan over the next three years toward expanding its artificial intelligence capabilities — an investment he now suggests may even underestimate the scale of what will be needed. Describing the figure as potentially ‘on the small side,’ Wu implied that future capital commitments could surpass current projections as AI continues to drive long-term growth. Reflecting investor confidence, Alibaba’s stock has risen by more than 86% since the beginning of the year, mirroring optimism about its strategic direction.
Wu’s remarks stand in contrast to those of Alibaba Chairman Joe Tsai, who earlier this year voiced more caution regarding the global AI investment frenzy. Speaking at the HSBC Global Investment Summit in March, Tsai remarked that he was starting to perceive ‘the beginning of some kind of bubble,’ citing the extraordinary rush by tech conglomerates to construct new data centers. Industry-wide, infrastructure expenditures have reached immense proportions: major technology companies such as Microsoft, Amazon, Google, and Meta are collectively expected to spend around $320 billion this year in their ongoing efforts to expand AI data capacity.
The discussion over whether an AI bubble exists has sharply divided the technology sector’s leadership. Several top executives have rejected the notion of an overheated market. Nvidia’s CEO, Jensen Huang, recently dismissed such fears during his company’s latest earnings call, emphasizing that, from Nvidia’s standpoint, the market dynamics reflect deepening and sustainable transformation rather than speculative excess. Others, however, have adopted a more measured approach. Sam Altman, CEO of OpenAI, acknowledged in August that investor enthusiasm appears to have outpaced current realities. He suggested that while artificial intelligence represents one of the most transformative developments in modern history, exuberant financial expectations may be running ahead of what today’s technological maturity warrants.
Ultimately, Alibaba’s leadership remains firmly optimistic. While some see warning signs of overexcitement, Eddie Wu’s position captures a contrasting philosophy: that the AI revolution is still in its early phases, driven not by speculation, but by substantive progress and tangible economic impact. His comments underscore a long-term confidence that continued investment in AI infrastructure will not only sustain Alibaba’s growth trajectory but also solidify its role as a major global innovator in the field of advanced computing and intelligent automation.
Sourse: https://www.businessinsider.com/alibaba-ceo-ai-bubble-invest-aggressive-eddie-wu-earnings-2025-11
