Alibaba’s CEO Eddie Wu dismissed concerns about an AI bubble, asserting that demand for artificial intelligence is robust and grounded in real-world applications across industries. Speaking during the company’s second-quarter earnings call on Tuesday, Wu emphasized that Alibaba is struggling to keep up with customer demand, stating, “We're not even able to keep pace with the growth in customer demand.” He noted that the company’s ability to deploy new servers is lagging behind the pace of adoption. Wu predicted that AI resources will remain in short supply over the next three years. He attributed the surge in demand not to hype but to tangible AI integration in areas such as product development, manufacturing, and enterprise operations. The company’s newly launched Qwen app achieved over 10 million downloads within its first week, highlighting strong market interest. Alibaba Group reported revenue of 247.8 billion yuan ($34.8 billion) for the quarter ending September 30, marking a 5% year-over-year increase. However, net income declined sharply by 53% to 20.6 billion yuan, primarily due to substantial investments in AI and commerce initiatives. The drop was driven by a decrease in operating income and a more than doubling of sales and marketing expenses. The cloud computing division emerged as the standout performer, growing 34% year-over-year to 39.8 billion yuan. This growth was fueled by rising demand for public cloud services and AI-powered solutions, including Alibaba’s Qwen platform. Wu reaffirmed the company’s commitment to aggressive AI investment, stating that the previously announced plan to spend 380 billion yuan on AI infrastructure over three years may now be insufficient. “In big picture terms, I would say that the 380 billion figure we had mentioned previously might be on the small side,” he said. Alibaba’s stock has surged more than 86% this year, reflecting investor confidence in its AI strategy. The CEO’s bullish stance contrasts with remarks made earlier this year by Alibaba’s chairman, Joe Tsai, who warned at the HSBC Global Investment Summit that signs of an AI bubble were beginning to emerge, particularly with the rapid expansion of data centers. The debate over an AI bubble has divided tech leaders. While Nvidia CEO Jensen Huang recently dismissed bubble fears, arguing that demand is fundamentally strong, OpenAI CEO Sam Altman acknowledged investor enthusiasm has outpaced reality. “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes,” Altman said in August. Meanwhile, major tech firms including Microsoft, Amazon, Google, and Meta are collectively projected to spend $320 billion on capital expenditures this year to expand AI infrastructure, underscoring the scale of the global race.