BABA(US:BABA) Xuan Gu Bao·2025-09-25 00:46Core Insights - Alibaba Cloud's capacity roadmap indicates a significant transformation in the industry, with CEO Wu Yongming highlighting a doubling of token usage every two to three months, reflecting explosive AI demand [1] - The company plans to invest an additional 380 billion RMB over the next three years to strengthen its computing infrastructure, with expectations that global data center electricity usage will increase tenfold by 2032 compared to 2022 [1] - Morgan Stanley forecasts that Alibaba Cloud will add over 3 GW of data center capacity annually from 2026 to 2032, equating to the total new capacity expected for the entire Chinese market in 2025 [1][2] - UBS believes Alibaba Cloud's investment intensity and sustainability exceed market expectations, estimating annual capital expenditures could reach 100 to 200 billion RMB based on projected capacity growth [1][4][5] Investment and Capacity Expansion - Morgan Stanley projects Alibaba Cloud's capacity will grow from approximately 2.5 GW in 2022 to 25 GW in ten years, indicating sustained high investment levels [2] - The firm anticipates that from 2026 to 2032, Alibaba Cloud will need to add over 3 GW of capacity each year, which is comparable to the predicted new capacity for the entire Chinese market in 2025 [2] - UBS estimates that Alibaba Cloud's total data center capacity in 2022 was around 1.5 GW, with a target of reaching 15 GW in ten years, implying an average annual increase of at least 1-2 GW [4] Capital Expenditure Implications - UBS links capacity growth to capital expenditure, estimating that each GW of data center demand requires approximately 100 billion RMB in IT equipment investment, leading to a potential annual capital expenditure of 100 to 200 billion RMB for 1-2 GW of new capacity [4] - This capital expenditure forecast is significantly higher than current market expectations, challenging doubts about the sustainability of AI capital expenditure cycles and the intensity of spending by large-scale vendors [5]