AI Investment "Turning Stone into Gold": NVIDIA, Alibaba and other giants continuously create market value miracles under the AI "arms race"

The surge in artificial intelligence is giving rise to a peculiar new phenomenon in the U.S. stock market: large-scale investment plans in AI often lead to a more significant increase in the market value of the investing companies. Taking Alibaba (BABA.US) as an example, on Wednesday, Alibaba's U.S. stock surged by as much as 10%. This came after the company announced that its investment in the AI sector would exceed the previously set target of $50 billion at the beginning of the year. Although the specific total amount of additional expected investment has not been disclosed, this news increased Alibaba's market value by over $35 billion. The company's Hong Kong stock rose by 50% in September, making it the best-performing stock in the Hang Seng Tech Index.

On Wednesday, the company announced plans to increase its investment in the AI sector and establish a new partnership with NVIDIA, which became the latest driving force behind its stock price increase and also boosted the sentiment of peers and suppliers. Options trading data shows that investors are increasingly betting on further increases in Alibaba's stock price, while Alibaba's stock price remains relatively low compared to other global companies.

This means that due to spending on AI projects, Alibaba has once again become China's hottest tech stock. Investors are flocking back to the stock market of this $420 billion internet giant.

Jian Shi Cortesi, a fund manager at GAM Investment Management, stated, "It is clear that Alibaba was undervalued during the period from 2022 to 2023, but investors needed an incentive to buy into it—this incentive has emerged, which is its potential in the AI sector. Nowadays, people increasingly view Alibaba as a company that integrates AI and cloud infrastructure, rather than just an e-commerce business."

Secondly, NVIDIA (NVDA.US) announced last week that it would invest $5 billion in competitor Intel (INTC.US), and on Monday, it announced plans to invest up to $100 billion in the parent company of ChatGPT, OpenAI. Within three trading days of announcing these two plans, the chipmaker's market value increased by over $320 billion—three times the expected total investment amount of these two agreements.

Subsequently, on Wednesday, Alibaba (BABA.US) saw its U.S. stock surge by as much as 10%. This came after the company announced that its investment in the AI sector would exceed the previously set target of $50 billion at the beginning of the year. Although the specific total amount of additional expected investment has not been disclosed, this news increased Alibaba's market value by over $35 billion.

Although large enterprises' massive investment plans typically do not yield immediate returns in the stock market, these actions indicate that investors are still flocking to anything related to AI and are eager to continue buying heavily into stocks of companies that have made significant investments in data centers and aim to become leaders in the field Nevertheless, the significant increase in market value has been achieved with only a few companies able to show substantial investment returns from their financial statements.

Tejas Dessai, head of thematic research at Global X Management Company, stated, "The market firmly believes that leading in the field of artificial intelligence requires substantial investment. At the same time, the market also believes that as long as there is sufficient scale and infrastructure to meet all these demands, profits can be gained from this opportunity."

So far this year, stocks that have seen price increases after committing to invest a total of over $317 billion in the field of artificial intelligence include Meta (META.US), Microsoft (MSFT.US), Alphabet (GOOGL.US), and Amazon (AMZN.US). The price increases of these companies have largely driven the rise of the S&P 500 index in 2025. The market value added by these companies this year far exceeds the amount planned for investment: the combined market value of these four companies has increased by approximately $1.8 trillion.

Oracle (ORCL.US) is also one of the beneficiaries of these plans to increase investment in the field of artificial intelligence. The company has also formed significant partnerships with well-known enterprises such as OpenAI, SoftBank, and Meta, and has a strong profit outlook, which has attracted investors' attention. It is expected that the company's capital expenditure will reach $35 billion in fiscal year 2026, and this figure will increase to $65 billion by fiscal year 2029. So far this year, the company's stock price has risen by over 80%, with a market value increase of nearly $390 billion.

Despite growing concerns that some recent deals (such as the deal between NVIDIA and OpenAI) may indicate a market bubble, enthusiasm for data center construction remains high. This is because these deals have a cyclical nature, meaning that NVIDIA is essentially investing in its customers.

Moreover, as the largest tech stocks hold a larger share of the market than ever before, this increased concentration risk means that any downward pressure on these stocks could trigger a significant decline in benchmark indices.

Louis Navellier, Chief Investment Officer of Navellier & Associates, wrote in a report to clients on Wednesday, "We are clearly in uncharted territory." The report elaborated on the concentration risk and the fact that the market capitalization of the U.S. stock market now exceeds twice the size of the country's economy.

"Bubble Environment"

Michael O’Rourke, Chief Market Strategist at Jonestrading, pointed out that NVIDIA's performance is particularly indicative of "atypical market behavior, which reflects the characteristics of a bubble environment." He also noted that the company's market value of up to $4.3 trillion means that even a slight change in stock price can lead to billions of dollars in market value fluctuations However, regardless of whether it is a bubble phenomenon, many people on Wall Street still believe that this trend is likely to continue, at least in the short term. Investors have clearly expressed their keen interest in the ambitious goals of artificial intelligence, and companies willing to invest heavily are thriving due to this arms race-like situation.

In the past, investments in technological infrastructure were often questioned due to adverse outcomes such as the bursting of the dot-com bubble. But now, there is more support for innovations that have already proven to be transformative.

Dessai stated, "The market has been very supportive of these companies making large-scale investments, which again proves the fact that the market indeed believes that artificial intelligence brings fundamental opportunities not only for these companies but for the entire economy. The biggest risk at present is underinvestment, especially for those companies that are industry leaders."