(Yicai) Feb. 25 -- Shares of Alibaba Group Holding plunged after Chief Executive Officer Eddie Wu said the Chinese tech giant plans to invest over CNY380 billion (USD52.4 billion) in building artificial intelligence and cloud hardware infrastructure in the next three years.

Alibaba [HKG: 9988] was trading down 2.8 percent at HKD131.90 (USD16.96) as of 1.40 p.m. in Hong Kong today, after earlier plunging as much as 7.9 percent. The company's New York-listed stock [NYSE: BABA] closed 10.2 percent down at USD129.04 yesterday.

Alibaba will increase its investment in three major AI areas in the next three years: infrastructure construction for AI and cloud computing, AI foundational model platforms and AI-native applications, and AI transformation and upgrading of existing businesses, Wu said yesterday. The CNY380 billion will go only in the first area.

The planned AI and cloud infrastructure investment for the next three years is more than what the company spent in the past decade and nearly 12 times Alibaba Cloud Intelligence Group's revenue in the past 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 amortization and other aspects, Wu noted.

However, given the strong user demand and the projections for the industry's future, Alibaba believes that these investments will soon be absorbed by the needs of both internal and external customers, he added.

Before 2023, Alibaba's AI investment to the company's total was only 4 percent, according to data from Tianyi Think Tank. But after 2023, the ratio surged to 50 percent. Alibaba has invested in several Chinese AI unicorns, including Zhipu AI, MiniMax, and Moonshot AI.

Editor: Futura Costaglione