Alibaba Group Holding and Tencent Holdings are doubling down on a massive artificial intelligence spending spree, betting that a new wave of Chinese-made chips will break the supply bottlenecks stifling their ambitions.

While both Chinese tech giants saw revenues trail expectations this quarter, they pledged an aggressive acceleration in capital expenditure, as home-grown silicon from Huawei Technologies and Alibaba’s in-house labs begins to reach scale.

Alibaba was likely to “overshoot” its original capex target of 380 billion yuan (US$56 billion) over three years, to fund the investment required for the buildout of AI data centres, CEO Eddie Wu Yongming told analysts on Wednesday. The company said its March quarter capex reached 27 billion yuan, slightly down from the previous quarter’s 29 billion yuan.

Meanwhile, Tencent reported a sharper surge, with first-quarter capex reaching 31.9 billion yuan – up 63 per cent from the previous quarter.

Tencent’s chief strategy officer James Mitchell further pledged “a substantial increase” in 2026 capex, especially in the second half, as more China-designed AI chips become available. Goldman Sachs forecast Tencent’s capex to hit 165 billion yuan in 2027, more than double its 2025 levels.

The surge comes as both companies are grappling with a global shortage of AI chips. “I can tell you that today there isn’t a single card on our service that is idle,” Alibaba’s Wu said on Wednesday.