Goldman Sachs significantly raised its capital expenditure forecast for Alibaba to 460 billion yuan: Inferring explosive growth in demand, increased AI efficiency drives stronger revenue

Goldman Sachs believes that the explosive growth in demand will continue to drive capital expenditures (Capex) upward for cloud service providers. The strategic paths of Chinese internet giants in the AI field are increasingly diverging, with Alibaba betting on the enterprise-level AI cloud market due to its full-stack capabilities, while ByteDance is making a full push in consumer-level (To-C) applications.

In a report on the 23rd, Goldman Sachs raised its capital expenditure forecast for leading Chinese cloud providers, expecting Alibaba's total capital expenditure for the fiscal years 2026 to 2028 to reach 460 billion yuan, significantly higher than the company's previous target of 380 billion yuan. The firm believes that the surge in AI inference demand is the core logic supporting this judgment, and higher computing efficiency may actually enhance the conversion rate of capital expenditure to cloud revenue, thereby accelerating revenue growth.

At the same time, the strategic differences among the giants are becoming increasingly apparent. Goldman Sachs pointed out that Alibaba is in a leading position in external AI cloud revenue scale and enterprise-level (To-B) services, with a clearer commercialization path. In contrast, ByteDance occupies the largest share in the To-C field and daily token consumption with its chatbot "Doubao," demonstrating its determination to explore consumer-facing AI applications.

The report suggests that the current valuations of major Chinese tech stocks remain attractive. The market has not yet entered an AI bubble, and the valuations of Tencent and Alibaba still have room for discount compared to their profit growth prospects and global peers (such as Google and Amazon). Based on this, Goldman Sachs reiterated its "Buy" rating for Alibaba and Tencent.

AI Efficiency Gains Cannot Halt Capital Expenditure Expansion

Recently, Chinese companies have made several breakthroughs in AI infrastructure and computing efficiency. For example, Alibaba Cloud launched a new GPU pooling system called Aegaeon, which reportedly saves 82% of GPU resources; DeepSeek's new OCR model can reduce token consumption for text input by 90%.

However, Goldman Sachs believes that these efficiency gains do not imply a corresponding reduction in capital expenditures. The data cited in the report shows that AI inference demand and token consumption are growing exponentially. ByteDance recently announced that its daily token consumption surpassed 30 trillion in September, doubling compared to April-May, and this volume is approaching Google's 43 trillion. Alibaba also revealed at the Cloud Summit that its AI inference demand doubles every 2-3 months.

Goldman Sachs predicts that capital expenditures for Chinese cloud service providers (CSP) will grow by 50% year-on-year in the third quarter of 2025. The firm analyzes that strong inference demand is the key driver for cloud providers to continue investing, and improvements in technological efficiency help convert these investments more effectively into revenue growth, forming a positive cycle.

Diverging Paths of Giants: Alibaba To-B, ByteDance To-C

Goldman Sachs' report clearly outlines the different strategic layouts of China's two major tech giants in the AI field.

Alibaba is focusing on the enterprise-level AI market, leveraging its "unique full-stack AI capabilities" to lead in external AI cloud revenue scale. On October 23, Alibaba officially launched a new Quark AI chatbot assistant service, which utilizes its advanced closed-source Qwen model, directly competing with ByteDance's "Doubao." Competing with Tencent's "Yuanbao". In addition, its Quark "Zao Dian" application has also made progress in multimodal video and image editing functions with the closed-source video model Wan2.5.

In contrast, ByteDance focuses more on exploring consumer-facing AI applications. Its "Doubao" chatbot has become a leader in China's To-C market and daily token consumption. ByteDance is accelerating the commercialization of "Doubao", for example, by seamlessly integrating Douyin e-commerce services into chats, allowing users to complete transactions directly within the app, and adding new features such as an AI keyboard.

Multimodal and Accelerated Commercialization

The report points out that China's multimodal large models are making progress in the global market and forming differentiated competitive advantages through strategies such as open-source, low cost, and high speed. For example, Tencent's "Hunyuan Image 3.0" model ranks high on the LMArena text-to-image model leaderboard. In terms of pricing, the report cites price comparison data indicating that Alibaba's Qwen3 Max model output price is 40% cheaper than GPT-5/Gemini 2.5 Pro.

The global application of Chinese AI models is also increasing. The report cites a statement from Airbnb's CEO, indicating that the company is extensively using Alibaba's Qwen model to support its customer service agents, highlighting that Chinese open-source AI models are gaining recognition in the global market.

In terms of commercialization, China's To-C applications are progressing along the path of ChatGPT. In addition to ByteDance's "Doubao" accelerating the integration of e-commerce functions, Alibaba's Quark has also launched a one-stop AI image and video creation platform "Zao Dian". Goldman Sachs believes that the commercialization path for China's To-C chatbots is still evolving and may ultimately be more driven by advertising revenue.

In terms of valuation, Goldman Sachs believes that an AI bubble has not yet emerged, and its U.S. strategists expect the AI capital expenditure boom in the U.S. to continue until 2026. According to the report, Tencent and Alibaba's expected price-to-earnings ratios (GAAP) for 2026 are 21 times and 23 times, respectively, compared to Google's 24 times and Amazon and Microsoft's 28-30 times, still at a "non-demanding" level