(Yicai) Feb. 25 -- Shares of Alibaba Group Holding plunged along with other Chinese tech stocks after the internet firm revealed plans to invest more than CNY380 billion (USD52.4 billion) building artificial intelligence and cloud infrastructure over the next three years.

After sliding by as much as 7.9 percent earlier today, Alibaba [HKG: 9988] closed 3.8 percent lower at HKD130.60 (USD16.80) a share in Hong Kong. In pre-market trading in New York, the firm’s stock [NYSE: BABA] was up 4 percent at USD134.15 as of 4.57 a.m. local time, after plunging 10.2 percent yesterday.

The selloff was part of a broader pullback in Chinese technology stocks such as Tencent [HKG: 0700] and Alibaba competitors JD.Com [HKG: 9618 / NASDAQ: JD] and PDD Holdings [NASDAQ: PDD] following strong gains this year that were turbocharged by the startling release of Chinese AI model DeepSeek-R1 last month.

Alibaba will increase its investment in three major AI areas over the coming three years; infrastructure construction for AI and cloud computing, AI foundational model platforms and AI-native applications, as well as AI transformation and upgrading of existing businesses, Chief Executive Eddie Wu announced yesterday.

Before 2023, Alibaba’s spending on AI as a share of its total investment was only 4 percent, according to data from Tianyi Think Tank. That soared to 50 percent after 2023. Alibaba has invested in several Chinese AI unicorns, including Zhipu AI, MiniMax, and Moonshot AI.

The CNY380 billion of planned investment will be dedicated solely to AI and cloud infrastructure, exceeding Alibaba’s total spending in this area over the past decade and amounting to nearly 12 times the revenue of its cloud business in the previous quarter.

Alibaba is entering its largest and most concentrated cloud infrastructure development phase, and the capital expenditure during this phase will have a certain impact on hardware depreciation and other areas, Wu noted.

But given strong user demand and forecasts for the industry’s future, Alibaba believes that these investments will soon be absorbed by internal and external customer needs, he added.

Editor: Futura Costaglione