The AI bubble is going global

It turns out Americans aren't the only ones wondering whether we’ve all gotten a tad overzealous about artificial intelligence.

Chinese technology stocks have plummeted over the last week as investors grow increasingly concerned that the nation’s AI scene might not be quite as much of a booming alternative to Silicon Valley as many had hoped.

And yes, all roads lead back to Big Tech’s monster AI infrastructure spending spree. Alibaba Chairman Joe Tsai rattled investors today when he questioned the merit of tech’s splash out on AI infrastructure while speaking at the HSBC Global Investment Summit in Hong Kong.

“I’m still astounded by the type of numbers that’s being thrown around in the US about investing into AI,” Tsai said. “People are talking, literally talking about $500 billion, several hundred billion dollars. I don’t think that’s entirely necessary. I think in a way, people are investing ahead of the demand that they’re seeing today,” he added.

But his jab at Silicon Valley backfired, and instead investors freaked out about Alibaba’s own AI investments. Shares finished the day down 1.35%.

The AI arms race

Tsai certainly isn’t the first to question just how many hundreds of billions should be dedicated to the ecosystem currently propped up by high schoolers using ChatGPT to cheat on their English homework.

It’s not just US big tech names throwing billions at building data centers: Softbank, as well as Alibaba itself, are investing in data infrastructure projects across the world. Still, Alibaba’s plan to invest $52.4 billion in AI over the next three years seems miniscule compared to Microsoft's $105 billion spent just this year.

Zoom out: Not everyone is a skeptic of massive infrastructure spending. After all, if machine learning does turn out to drive a once-in-a-century technological revolution, it makes sense that tech companies are willing to pay whatever it takes to not miss the boat.—LB