Big rewards for investing in AI! After NVIDIA hits a new high, Alibaba surges 10% during trading

The investment boom in artificial intelligence (AI) is creating a peculiar new algorithm in the stock market: large-scale AI investment plans can yield market value growth returns far exceeding the investment amount.

On Monday, NVIDIA announced plans to invest up to $100 billion in OpenAI, and its stock price rose 3.9% that day, reaching a historic high. Two days later, Alibaba announced an increase in AI capital expenditure, leading to a surge in its U.S. stock, which at one point rose 10.5% during trading, closing up about 8.2%, marking a nearly four-year high. The stock price movements of these two giants indicate that the market has seemingly set an immediate reward mechanism for substantial investments in the AI field.

In the three trading days following the announcement of a $5 billion stake acquisition in Intel and the investment plan in OpenAI, NVIDIA's market value increased by over $320 billion, nearly three times the expected investment amount. Although Alibaba did not disclose the specific additional investment amount, the mere statement that spending would exceed the previous target scale of about $53 billion has driven a market value increase of over $35 billion.

These phenomena indicate that investors still have a strong desire for AI-related investments, even though only a few companies have demonstrated substantial investment returns in their financial reports. Companies like Meta, Microsoft, Alphabet, and Amazon have collectively committed over $317 billion in AI investments this year, with the market value of these four companies increasing by about $1.8 trillion, far exceeding their investment commitments.

Tejas Dessai, head of thematic research at Global X Management Company, commented: "The market is convinced that to gain a leading position in the AI field, substantial funding is required, and it believes that as long as there is sufficient scale and infrastructure to meet market demand, substantial profits can be obtained from the AI sector."

Dessai also stated, "The market is very friendly to these companies' large-scale investments, which again indicates that the market generally believes AI presents significant development opportunities not only for these companies but for the entire economy. The biggest risk currently is underinvestment, especially for industry leaders."

Market Responds Positively to Alibaba's AI Strategy Upgrade

At the 2025 Cloud Habitat Conference that opened this Wednesday, Alibaba CEO Eric Wu stated that global AI investment is expected to reach $4 trillion in the next five years, and Alibaba must keep pace. Alibaba is actively promoting the plan announced in February this year—investing 380 billion yuan (approximately $53 billion) over the next three years for cloud and AI hardware infrastructure construction, with plans for even larger investments, although specific amounts have not been disclosed.

Eric Wu also revealed an astonishing goal: by 2032, the energy consumption scale of Alibaba Cloud's global data centers will increase tenfold from the 2022 level.

Alibaba also released the Qwen3-Omni open-source model, capable of processing text, images, audio, and video content Alibaba Cloud has also reached a software cooperation agreement with NVIDIA in the field of Physical AI, integrating NVIDIA's AI development tools used for training robots and autonomous vehicles.

Alibaba Cloud's AI platform PAI will integrate NVIDIA's Physical AI software stack, providing enterprise users with full-link platform services such as data preprocessing, simulation data generation, model training evaluation, robot reinforcement learning, and simulation testing, further shortening the development cycle for applications like embodied intelligence and assisted driving.

Alibaba Cloud will establish new data centers in Brazil, France, and the Netherlands, with revenue from this business growing 26% year-on-year in the April to June quarter. Eddie Wu stated that AI and cloud computing are on par with e-commerce as growth engines for Alibaba.

Analysts Optimistic About Upside Potential

Wall Street holds a generally optimistic view of Alibaba. According to a FactSet survey, over 50 analysts have given Alibaba a rating equivalent to a buy, with none issuing a sell rating. On Wednesday, ahead of the U.S. stock market opening, analysts set an average target price for Alibaba slightly below $167, but Alibaba's U.S. stock opened close to $176, reaching over $180.10 during the trading session.

After meeting with Alibaba's management earlier this month, Nomura Securities analysts expressed optimism about Alibaba's e-commerce business. Nomura analyst Jialong Shi stated that Alibaba hinted at substantial spending this quarter, primarily due to "the need to invest heavily in expanding the delivery team and promoting the newly launched instant delivery business to cope with the surge in orders."

Shi noted that Alibaba revealed plans to reduce losses per order by 50% by October through optimizing operational efficiency and lowering marketing expenses as the business scales.

Morningstar analyst Chelsey Tam believes that demand in the education and healthcare sectors is emerging, and the development of tools by companies using Alibaba's open-source AI models is also generating additional demand. He said, "We believe Alibaba's stock is undervalued, and the market has not fully reflected Alibaba's AI cloud potential and the current management's ability to enhance competitiveness."

Additionally, according to China Entrepreneur magazine, on the evening of September 16, Jack Ma was spotted by netizens at Alibaba's Digital Ecological Innovation Park. That same evening, Alibaba's self-developed AI chip "Pingtouge" (平头哥) was featured on CCTV's news broadcast, with several parameters comparable to NVIDIA's H20. This is also seen as a signal that Alibaba is at the forefront of the AI technology revolution.

Reports indicate that Jack Ma has returned to the company in an informal but significant leadership role, which may help boost employee and investor confidence.

Regulatory and Competitive Risks Remain

Bo Pei, an analyst at U.S. Tiger Securities, pointed out that Alibaba still faces multiple risk factors. For example, large internet platforms in China may face more antitrust regulations, and Alibaba is also facing potential threats from U.S. disclosure rules for Chinese companies. Intense market competition also poses challenges for the company.

As of Wednesday's close, Alibaba's stock price has risen over 108% since the beginning of this year, poised for its best annual performance since 2017.

According to FactSet data, Alibaba's current valuation is 18.3 times its expected future earnings, in line with its peers but significantly lower than the average level of 31 times for the S&P 500 Information Technology sector For high-growth stocks, this valuation level does not seem too high.

This Monday, "Cathie Wood" and her ARK Investment Management company bought Alibaba for the first time in four years, purchasing stocks worth approximately $16.3 million, and continued to increase their holdings in Baidu, with the total value of their holdings rising to about $47 million.

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