Throwing money at AI brings big rewards! After Nvidia hits a new high, Alibaba surges 10% intraday.

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The artificial intelligence (AI) investment boom is creating a peculiar new algorithm in the stock market: large-scale AI investment plans are bringing about market value growth returns that far exceed the investment amount.

This Monday, Nvidia announced plans to invest up to $100 billion in OpenAI. Its stock price closed up 3.9% that day, hitting a record high. Two days later, Alibaba announced an additional capital expenditure in AI. Alibaba's US stock surged, rising as much as 10.5% intraday and closing up about 8.2%, reaching a nearly four-year high. Judging from the stock performance of these two giants, the market seems to have established an instant reward mechanism for heavy investment in the AI field.

Within the three trading days of announcing the acquisition of $5 billion worth of Intel shares and its investment plan in OpenAI, Nvidia’s market value increased by over $320 billion, almost three times its expected investment. Although Alibaba did not disclose a specific additional investment amount, its statement that spending would exceed the previous target of about $53 billion alone drove its market cap up by more than $35 billion.

These phenomena indicate that investors still have a strong appetite for AI-related investments, even though currently only a handful of companies are demonstrating substantial investment returns in their financial reports. This year, Meta, Microsoft, Alphabet, and Amazon have collectively pledged over $317 billion in AI investments, while the combined market value of the four companies grew by about $1.8 trillion, far exceeding their investment commitments.

Tejas Dessai, Head of Theme Research at Global X Management Company, commented: "The market is convinced that gaining a leading position in AI requires massive investment, while believing that as long as there is enough scale and infrastructure to meet market demand, companies can reap significant profits from AI."

Dessai also said: “The market is very receptive to these companies’ large-scale investments, which again shows that AI is widely regarded as a major development opportunity not only for these companies but also for the overall economy. The biggest current risk is underinvestment, especially for industry leaders.”

The Market Responds Positively to Alibaba’s AI Strategy Upgrade

At the 2025 Yunqi Conference opening this Wednesday, Alibaba CEO Wu Yongming stated that global AI investments are expected to reach $4 trillion over the next five years, and Alibaba must keep pace. Alibaba is actively pushing forward the plan announced in February—to invest 380 billion yuan (about $53 billion) in cloud and AI hardware infrastructure over the next three years, and is planning to add even more, though it did not specify the additional amount.

Wu Yongming also revealed an astonishing goal: By 2032, the energy consumption scale of Alibaba Cloud’s global data centers will be increased tenfold compared to 2022.

At the same time, Alibaba released its Qwen3-Omni open-source model, which can process text, images, audio, and video content.

Alibaba Cloud also reached a software cooperation agreement with Nvidia in the field of Physical AI, integrating Nvidia’s AI development tools for robot and autonomous vehicle training.

Alibaba Cloud’s AI platform PAI will integrate Nvidia’s Physical AI software stack, providing enterprise users with end-to-end platform services including data preprocessing, simulation data generation, model training and evaluation, robot reinforcement learning, simulation testing, and more—further shortening the development cycle for applications such as embodied intelligence and assisted driving.

Alibaba Cloud will build new data centers in Brazil, France, and the Netherlands. Its revenue for the April to June quarter grew 26% year-on-year. Wu Yongming stated that AI and cloud computing are growth engines for Alibaba on par with e-commerce.

Analysts Optimistic About the Upside Potential

Wall Street generally holds an optimistic attitude towards Alibaba. According to a FactSet survey, more than 50 analysts rate Alibaba as a buy, and none have issued a sell rating. Pre-market on Wednesday, analysts gave Alibaba an average target price just under $167, but Alibaba’s US stock opened near $176 and climbed above $180.10 during trading.

Earlier this month, after meeting with Alibaba’s management, Nomura Securities analysts showed an optimistic attitude towards Alibaba’s e-commerce business. Nomura analyst Jialong Shi said that Alibaba hinted at continued large expenditures this quarter, mainly because “the company needs to invest a large amount of upfront funds to expand its delivery team to cope with the surge in orders, as well as for brand promotion of the newly launched instant delivery business.”

Shi stated that Alibaba revealed that as business expands, the company plans to reduce per-order losses by 50% by October by optimizing operational efficiency and reducing marketing expenses.

Morningstar analyst Chelsey Tam pointed out that demand from the education and medical industries is emerging, and the use of Alibaba’s open-source AI models by companies to develop tools brings additional demand. He said: “We believe (Alibaba) stock is undervalued, and the market has yet to fully reflect Alibaba Cloud AI’s potential and the current management’s ability to enhance competitiveness.”

In addition, according to Entrepreneur China, on the evening of Tuesday, September 16, Jack Ma was spotted by netizens at Alibaba’s Digital Ecology Innovation Park. On the same night, Alibaba’s self-developed AI chip “PingTouGe” PPU made its debut on the CCTV news broadcast, with multiple specifications matching Nvidia’s H20. This is also seen as a signal that Alibaba stands at the forefront of the AI technological revolution.

It is reported that Jack Ma has returned to the company in an informal but important leadership capacity, which may help boost confidence among employees and investors.

Regulatory and Competitive Risks Remain

Tiger Securities US analyst Bo Pei pointed out that Alibaba still faces multiple risk factors. For example, large Chinese internet platforms may face more antitrust regulation, and Alibaba is also exposed to potential threats from US disclosure rules for Chinese companies. Intense market competition is also a challenge for the company.

As of Wednesday’s close this week, Alibaba’s stock price has gained more than 108% since the start of the year, on track to achieve its best annual performance since 2017.

According to FactSet data, Alibaba’s current valuation stands at 18.3 times expected future earnings, on par with peers but significantly lower than the S&P 500 Information Technology sector’s average of 31 times. For a high-growth stock, this valuation level is not considered high.

This Monday, Cathie Wood’s ARK Investment Management bought Alibaba for the first time in four years, acquiring shares worth about $16.3 million, and continued to increase its position in Baidu, bringing its total holdings to about $47 million.

The ARK team recently commented: “AI is the next wave of innovation, and leading companies in this field may achieve exponential growth.”

Risk Warning and DisclaimerThe market has risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account the special investment goals, financial situation or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investments made accordingly are at your own risk. ```