Guotai Junan: Ali Capital's increased spending drives investment in domestic computing power.

Guotai Junan Securities released a research report stating that Alibaba's capital expenditure exceeded expectations, and the average annual investment in AI infrastructure capital expenditure over the next 3 years may exceed 50 billion yuan. Alibaba has significantly increased its investment in AI infrastructure, and domestic CSP manufacturers are expected to actively follow suit, potentially replicating the IDC investment boom seen during the "Internet +" cycle. The recommended sequence of Alibaba's IDC industrial chain-related manufacturers is as follows: optical modules > IDC > switches > liquid cooling > power supply. 1) Optical modules/chips; 2) IDC; 3) Switches; 4) Liquid cooling; 5) Power supply. Alibaba's capital expenditure exceeded expectations, and the average annual investment in AI infrastructure capital expenditure over the next 3 years may exceed 50 billion yuan. Alibaba's capital expenditure in the third quarter of the 2025 fiscal year was 31.4 billion yuan, 103% higher than expected, driving AI-related product revenue to achieve year-on-year growth of over 100% for 6 consecutive quarters. Alibaba's capital expenditure and progress in the AI business both exceeded market expectations. In terms of future investment plans, Alibaba will increase capital expenditure to meet the demand for AI infrastructure, and the total capital expenditure over the next 3 years is expected to reach 150 billion yuan. Alibaba has significantly increased its investment in AI infrastructure, and domestic CSP manufacturers are expected to actively follow suit, potentially replicating the IDC investment boom seen during the "Internet +" cycle. It is difficult for AI large models to achieve profitability at the model level through methods such as paid use. The launch of DeepSeek has driven models like ChatGPT to become open source, which validates the point that Guotai Junan Securities believes tight integration with the application end is one of the important ways for AI large models to achieve profitability. Reviewing the "Internet +" cycle, we find that the expansion of the applic...