Chinese tech giant Alibaba Group Holding Ltd. (BABA) announced a $36 million (250 million yuan) joint venture with China National Nuclear Power Co. aimed at securing stable electricity for its rapidly expanding network of AI data centers. The partnership was disclosed in corporate filings this week and marks a strategic move to address the immense and growing power demands of artificial intelligence infrastructure.
The venture comes as Alibaba is in the midst of a massive $53 billion investment commitment to AI research and development, with a significant portion earmarked for data center construction. The exact operational scope of the joint venture—whether it will develop new power plants, manage energy trading, or execute hybrid clean-energy projects—remains undisclosed, contributing to initial market uncertainty.
Following the announcement, Alibaba's stock experienced a slight decline, which analysts attributed to investor caution over execution risks and the relatively modest registered capital, which is unlikely to fund new nuclear facility construction from scratch. The market reaction reflects sensitivity to the ambiguity surrounding capacity plans, target locations, and timelines for translating the partnership into tangible power availability.
The move aligns Alibaba with a global trend where major tech firms like Meta and Microsoft are partnering with nuclear operators to secure reliable, low-carbon energy for their data-intensive operations. In China, the tech sector faces growing pressure to secure low-carbon energy, and Alibaba could leverage mechanisms like the Green Electricity Trading system or long-term power purchase agreements.
Despite short-term hesitation, analysts recognize significant long-term potential. Securing a stable, low-carbon energy source could help Alibaba reduce operational costs, enhance sustainability credentials, and support the aggressive expansion of its AI and cloud-computing infrastructure. Wall Street maintains a bullish outlook, with all 14 analysts covering the stock over the past three months rating it a "Buy" and an average price target of $203.09, suggesting roughly 25% upside.
