Alibaba (NYSE:BABA) Rolls out $15 Billion R&D Investment Plan, Eyes Top Spot in Cloud Services

Chinese e-commerce major Alibaba Group Holding Ltd. (NYSE:BABA) looks to expand its presence in artificial intelligence after unveiling a plan to spend $15 billion on research and development over the next three years.

The company is launching the Alibaba DAMO Academy, which will oversee the opening of research hubs in various locations worldwide and will focus on developing financial tech, internet of things, data intelligence, among others.

The academy will be headed by Alibaba’s Chief Technology Officer Jeff Zhang. Initially, the plan involves opening labs in China, the U.S., Russia, Israel and Singapore and recruiting about 100 acclaimed researchers and scientists from the around the globe.

Alibaba Group Holding Ltd. (NYSE:BABA)
Source: http://docs.alibabagroup.com/assets2/images/en/news/article/p171011a.jpg

The academy will also seek to collaborate with tech talent and educational institutions as well as create an advisory board to provide guidance on key research issues.

According to Alibaba, the program will help the company achieve its goal to generate 100 million job opportunities and serve 2 billion customers in 20 years. It currently has about 25,000 engineers on staff.

“We aim to discover breakthrough technologies that will enable greater efficiency, network security and ecosystem synergy for end-users and businesses everywhere,” Zhang said in a company statement.

D.A. Davidson analyst Gil Luria said the program is part of Alibaba’s bigger version of turning into a global internet leader.

Bloomberg data, meanwhile, showed that Alibaba spent about $6.4 billion on R&D in the past three fiscal years, and this significant increase in investment demonstrates the company’s efforts to keep up with Amazon.com Inc. (NASDAQ:AMZN), Alphabet Inc.’s (NASDAQ:GOOGL) Google and Facebook Inc. (NASDAQ:FB) in AI and cloud computing.

The company’s stock rose slightly following the announcement.

Cloud Computing Push

Alibaba built up its reputation in the online marketplace and has since widened its reach with major investments in e-commerce platforms Lazada and Tokopedia earlier in the year.

Now, it has set its sights on the pole position in cloud computing.

Driven by its large expansion in the domestic and international markets, Alibaba’s cloud computing unit is on pace to supplant Amazon Web Service as the globe’s number one cloud services provider, according to Simon Hu, head of Alibaba Cloud.

Speaking at a conference in Hangzhou, China, Hu noted that Alibaba has taken on its U.S. rival on all fronts over the past years and some of its products have already topped theirs.

Alibaba entered the cloud services market in 2009 and has risen in the ranks since then.

A study from research firm Gartner found that Alibaba is third behind Amazon and Microsoft Corp. (NASDAQ:MSFT) in the IaaS public cloud services market.

Alibaba ended the latest trading session up 0.87 percent higher at $184.69 per share. The stock has surged over 109 percent so far in the year.