Staff Reporter
Joe Tsai, Chairman of Alibaba Group Holding Ltd., has raised concerns over a possible bubble in data center construction, suggesting that the rapid pace of development may exceed the actual demand for AI services.
At the HSBC Global Investment Summit in Hong Kong on Tuesday, Tsai pointed out that the surge in construction from major tech companies, investment funds, and other entities—spanning from the US to Asia—appears to be somewhat indiscriminate. He noted that many of these projects are being initiated without clear customer bases.
Tech giants such as Microsoft Corp. and SoftBank Group Corp. are investing billions in crucial AI chips from Nvidia Corp. and SK Hynix Inc. Alibaba, which announced its commitment to AI in February, plans to invest over 380 billion yuan (approximately $52 billion) in the next three years.
As server farms emerge across regions from India to Malaysia, US initiatives, including a proposed $500 billion Stargate project championed by Trump, are also gaining attention.
“I see the beginnings of a bubble,” Tsai remarked to attendees at the summit. He expressed concern that many projects are securing funding without having established “uptake” agreements. “It worries me when data centers are built on speculation, with numerous funds raising billions or millions without clear plans.”
Tsai specifically highlighted the scale of US investments. This year alone, Amazon.com Inc., Alphabet Inc., and Meta Platforms Inc. have pledged to spend $100 billion, $75 billion, and up to $65 billion, respectively, on AI infrastructure.
“I’m still astonished by the figures being discussed in the US regarding AI investments,” Tsai said. “People are literally talking about $500 billion and hundreds of billions of dollars. I don’t think that level of investment is entirely necessary. It seems that people are investing ahead of the current demand while projecting much larger future needs.”
