Alibaba and Tencent Ramp Up AI Spending Amid Chip Constraints

Alibaba Group Holding and Tencent Holdings are accelerating infrastructure investments despite semiconductor shortages, pivoting to domestic chip suppliers like Huawei Technologies as U.S. export controls bite. Alibaba’s March 2026 quarterly results revealed a strategic shift—profits cratered to 86 million yuan (non-GAAP) from 29.8 billion yuan a year earlier, even as revenue edged up. The company is diverting capital from core commerce to AI data centers and rapid delivery services, with CTO Eddie Wu pledging 380 billion yuan ($56B) over three years for AI infrastructure.

Tencent is taking a more measured approach, increasing spending by 31.9 billion yuan while maintaining profitability. Both firms highlight China’s push for self-sufficiency in advanced computing—Alibaba’s AI division now generates 8.97 billion yuan quarterly with 35.8 billion yuan in annual recurring revenue, marking its 11th straight quarter of triple-digit growth.