After 12 consecutive quarters of workforce reductions, Alibaba is set to restart hiring, according to Chairman Joe Tsai. Speaking at HSBC’s Global Investment Summit in Hong Kong, Tsai attributed the decision to renewed confidence following a rare meeting between Chinese President Xi Jinping and top business leaders. However, while China’s tech industry is showing signs of recovery, Tsai warned that the U.S. may be heading toward an artificial intelligence (AI) investment bubble.
A Turning Point for Alibaba and China’s Tech Sector
For the past four years, China’s tech industry has struggled under regulatory crackdowns and economic uncertainty. The meeting between Xi and key industry figures, including Alibaba’s co-founder Jack Ma, is being viewed as a major shift in government policy—one that signals encouragement for private businesses to reinvest and expand.
“This was a very clear message to the business community: Go ahead, reinvest in your business, and start hiring again,” Tsai stated. He emphasized that Alibaba has reached the lowest point in its workforce reduction cycle and is now prepared to rebuild.
China’s economy has been grappling with slow growth and a real estate crisis, leading to high unemployment, particularly among young graduates. Tsai believes that increasing job opportunities will restore both business and consumer confidence.
“When people have job security and income growth, that will translate into stronger consumer confidence,” he explained.
DeepSeek’s Impact on China’s AI Industry
The AI industry in China has been experiencing a resurgence, largely driven by companies like DeepSeek. The startup made global headlines by developing a powerful AI model using less advanced chips, proving that U.S. sanctions have not crippled China’s AI sector.
Guo Shan, a partner at Hutong Research, pointed out that DeepSeek’s innovations have encouraged hiring in the tech industry. “DeepSeek’s open-source model has widened AI applications, creating more job opportunities in China’s tech sector,” she noted.
Is an AI Bubble Forming in the U.S.?
While China’s tech sector is showing resilience, Tsai expressed concerns over the massive investments in AI happening in the United States. He highlighted the enormous sums being poured into AI infrastructure, particularly in data centers, as a potential red flag.
“People are talking about $500 billion, several hundred billion dollars. I don’t think that’s entirely necessary. It feels like people are investing ahead of actual demand,” he cautioned.
He further noted that companies building data centers without confirmed demand is a sign that the industry might be entering a speculative phase. “This could be the beginning of some kind of bubble,” Tsai added.
Alibaba’s AI Investment Strategy
Despite concerns about overinvestment in the U.S., Alibaba remains committed to expanding its AI and cloud computing infrastructure. The company has announced plans to invest 380 billion yuan ($52 billion) over the next three years.
Meanwhile, investor confidence in China’s tech sector has been rising. The Hang Seng Tech Index, which includes Alibaba, has surged by 24% in 2025, driven by Xi’s meeting with tech leaders and the excitement surrounding DeepSeek’s AI breakthroughs.
As Alibaba resumes hiring and China’s AI industry gains momentum, the question remains: Is the U.S. truly heading for an AI bubble, or is this just the beginning of a new era of technological dominance?
