Alibaba Chair Warns of US AI Data Center Bubble

Alibaba chairman Joe Tsai has raised concerns about a potential bubble forming in the AI data center construction sector due to overinvestment, particularly in the United States. Speaking at the HSBC Global Investment Summit, Tsai expressed worry that the rapid expansion of AI data centers might exceed the actual demand for AI services. He criticized the strategic rush by tech giants and investment funds to build infrastructure without securing customer agreements, highlighting the $500 billion Stargate Project in the US as an example of speculative investment. Tsai's remarks come amid massive spending plans by US tech companies, including Microsoft, Amazon, Google, and Meta, which are expected to spend $320 billion on AI infrastructure this year. He also noted that the emergence of efficient AI models using less powerful semiconductors could further impact the need for extensive data center investments. The fears of an AI bubble are reminiscent of the dot-com bubble of the late 1990s, with Tsai advocating for more measured investment based on current demand projections.