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· Posted on
September 29, 2025

Alibaba just plugged itself into the AI arms race after promising to toss billions more into the ring with a new Nvidia partnership

Alibaba deepened its AI push with a new Nvidia deal and model launch, pledging billions more in Capex that lifted its shares 8%.

What's the key learning?

  • Capex builds future growth through big, one-off investments, while Opex covers day-to-day running costs.
  • For tech giants, Capex-heavy AI spending is now essential to scaling capabilities.
  • Massive upfront AI investments can boost investor excitement but weigh on short-term profits.

👉 Background: Alibaba launched in China back in 1999 and has grown into a $400 billion USD giant. It owns Alibaba.com, Aliexpress, Alibaba Cloud, Chinese online shopping website Taobao, gaming platforms, long-form video platforms and even a logistics business.

👉 What happened: Now, Alibaba’s CEO announced that they will expand its $53 billion USD AI investment plan after a key partnership with Nvidia. On top of that, Alibaba launched its most powerful AI model yet.

👉 What else: Investors clearly liked this aggressive-spending-side of Alibaba as its share price jumped 8% off the back of this big capital expenditure announcement.


What's the key learning?

💡Capital expenditure (Capex) and operating expenditure (Opex) are two very different ways for a company to invest in their future. One builds your empire, the other keeps the lights on.

💡Capex refers to big, one-off investments in physical or digital infrastructure. Meanwhile, Opex covers the ongoing costs of running the business.

💡For big tech companies, big Capex budgets have become crucial to scaling their AI capabilities. In fact, Amazon, Google, Microsoft, and Meta, have plans to spend a combined $364 billion USD on AI in 2025 alone. But these upfront costs can weigh heavily on profitability, especially when the payoff may take years.

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