Too many data centres? Some AI-linked bets risk creating a ‘speculative bubble’, Tsai says

‘People are talking literally about US$500 billion, several US$100 billion [projects]. I don’t think that is entirely necessary,’ Tsai says

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Alibaba Group chairman Joe Tsai says some of the multi-billion outlays may be unnecessary. Photo: Handout

Published: 2:35pm, 25 Mar 2025Updated: 5:11pm, 25 Mar 2025

Alibaba Group Holding chairman Joe Tsai is raising some alarm bells on global tech investments to support advances in artificial intelligence (AI) services, citing a possible bubble in speculative bets on data-centre construction as an example.

A rush among global tech leaders and investment funds into infrastructure projects to support AI’s computational, storage and energy needs is worrisome, he said at the HSBC Global Investment Summit in Hong Kong on Tuesday.

“I start to see the beginning of some kind of bubble,” he said, adding that some projects started to raise funds without having secured any takers to use the data centres. “I start to get worried when people are building data centres on speculation.”

Tsai pointed to a couple of initiatives in the US including the Stargate Project, a joint venture between US start-up OpenAI and Japanese conglomerate SoftBank that includes a pledged investment of US$500 billion over the next four years. AI investments in the US seemed to be outpacing current demand, he said.

Alibaba has pledged to invest US$52 billion over the next three years in its ‘all-in on AI’ strategy. Photo: Agence France-Presse

“I’m still astounded by the type of numbers that [are] being thrown around in the US about investing into AI,” he said. “People are talking literally about US$500 billion, several US$100 billion [projects]. I don’t think that is entirely necessary.”

Alibaba, which owns the South China Morning Post, is also raising its bets in the industry. Last month, it pledged to invest at least 380 billion yuan (US$52 billion) in cloud computing and AI infrastructure over the next three years as part of its “all-in on AI” strategy. The spending plan is the biggest computing project by a single private business in China.