Executive Chairman, Alibaba Group
Joe Tsai on the Future of AI
At VivaTech 2026, our Chairman Joe Tsai shared Alibaba's long-term AI vision focused on delivering real value. As AI scales from ...
About Joseph Tsai
Joseph Tsai, Executive Chairman of Alibaba, has been active in public engagements discussing the company's AI strategy and international partnerships. At VivaTech 2026, Tsai described the shift from conversational chatbots to autonomous AI agents as a "pivotal inflection point," stating that AI is "producing units of human intelligence and human productivity" and that the total addressable market for AI is roughly half of global GDP. He also said that Alibaba's AI has "moved beyond the initial investment phase and progressed to commercialization at scale." During the company's March quarter and full fiscal year 2026 earnings call, Tsai reported that AI-related product revenue for the Cloud Intelligence Group had surpassed 35.8 billion RMB, accounting for 30% of the group's external revenue, and that the company expects this to cross the 50% threshold within a year. He noted that Alibaba is the only AI cloud provider in China capable of delivering self-developed AI chips at scale, which he described as a structural advantage. In June 2024, Tsai hosted Pakistani Prime Minister Shehbaz Sharif at Alibaba's headquarters in Hangzhou, where multiple memorandums of understanding and an AI-drafted agreement were signed. Tsai praised the Prime Minister's "Shehbaz Speed," saying the partnership would benefit not only Pakistan and China but also contribute to global peace. He also commented on his basketball team ownership, noting that the New York Liberty have three French players and the Brooklyn Nets have one, calling France "the most important non-American influence in the NBA and WNBA."
Transcript (38 segments)
✨ AI-enhanced transcript with speaker attribution
M
Maurice0:17
Wow, what a big room. Bonjour, are you enjoying today? Yeah, a bit trippy. Okay, now you will have a great, great, great session. Jai from Alibaba with Christoph Jacobiz from Leico. As you know, VivaTech is a worldwide platform and we are pleased to welcome more than 170 countries. And when you walk through the halls, you will see a lot of pavilions from countries and a lot of nationalities. We hear a lot about our friends from the US, from Europe, of course, but too often we tend to forget the other half of the world. And that's why our next guest is here. He co-founded Alibaba. People do not know very well his name but they will remember forever because he has helped transforming Alibaba and Alibaba has created Qwen. And I'm sure that you don't know but Qwen is the most widely used open source model in the world. The most widely used open source AI model. It's not chips. It's not cloud. It is Qwen. And Alibaba released its latest version of Qwen a few months ago. And we are pleased to welcome someone who has been at the helm of the company since its inception and he was the man behind the open source of AI. So please welcome very warmly Christoph Jacobiz from Leico and a big round of applause for Joe Tsai, chairman and co-founder of Alibaba.
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Christoph Jacobiz2:54
Joe, welcome. Hello everyone. We're very, very pleased to, as Maurice said, to welcome Joseph Tsai, the co-founder and chairman of Alibaba. Alibaba went through many revolutions and of course we'll speak about the last one, about the open source LLM model. But first, can we talk about your history? Because many people in France still think you are a marketplace, B2B, B2C. We know AliExpress here. I know you have the largest marketplace in China. So could you tell us more about the evolution of your company, of your group?
J
Joseph Tsai3:40
Yeah, thanks Christoph, it's great to be here. So Alibaba started in 1999 as a B2B marketplace and at the time the business idea was very simple. We put these small Chinese manufacturers and trading companies online to sell to the whole world wholesale. So that was on the cusp of China entering the WTO, so the export business was about to boom. And then we got into the consumer B2C business and launched a website called Taobao which today is the largest consumer e-commerce business in China.
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Christoph Jacobiz4:20
How many consumers?
J
Joseph Tsai4:21
We serve 820 million Chinese consumers. And by the way, this platform helps European companies and brands to sell 30 billion euros to Chinese consumers every year. So you could say that Alibaba is quite important for European companies doing business around the world. But we went big into AI and cloud, and this is actually quite a long history. We've been investing in cloud technology since 17 years ago and that's because of necessity. We were seeing that we were managing so much data from our e-commerce business and transactions on a daily basis that if we continued to be dependent on other people's technology, like database and storage technology from others, we would end up giving all of our profits to the technology providers. And hence there was an effort to develop our own proprietary technology to manage all the data. And that's when our cloud business was born. Basically we ate our own dog food before we launched the business to offer that service to third-party customers. But I think that's sort of from the micro perspective. From a macro perspective, we're all in on AI. The logic is very simple. If you ask me how big is the market, what is the demand, what is the TAM — total addressable market — I would tell you that it's much, much bigger than anybody's IT budgets. It's much, much bigger than the software market. Because what is AI? AI is producing units of human intelligence and human productivity. And if you look at global GDP, over a hundred trillion dollars of GDP, at least half of it — fifty trillion dollars — is about human productivity and human intelligence. And that is the TAM of AI, and that's why we're all in on AI.
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Christoph Jacobiz6:32
So you think AI will really make us have a higher productivity? Because we just had like one hour ago a round table where we were questioning that people are investing a lot but they don't see the results yet.
J
Joseph Tsai6:47
They don't see the results yet. I think a lot of corporate CEOs will tell you that their engineers are burning a lot of tokens, cost goes up. But I think we're at the cusp of real productivity gains. Right now a lot of people are experimenting. There are definitely, like we see it in our company, super users that use the coding tool for example, and they are not just doing their work within their domain but they're also experimenting with other stuff — because when you give engineers toys they will always play with it. And they didn't realize the company's actually paying for it. So this is what's happening right now. But what I truly believe — this is really a belief — whether production of artificial units of intelligence will be able to add value to human intelligence. And it's like religion. I don't want to convince all of you that that's going to happen, but we believe that that's going to happen.
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Christoph Jacobiz7:54
So if we go back to the Alibaba evolution, in which layer of AI do you invest most? Is it infrastructure, models, cloud services?
J
Joseph Tsai8:05
So we are in at least four layers of AI. At the bottom, we're not involved in energy because in the China context energy is actually very efficient, less expensive, and the Chinese government has invested over the last 15 years in the national grid that makes energy production and delivery very, very efficient. But from the bottom we're involved in chips, infrastructure in terms of our cloud business, and also the model. As Maurice very kindly pointed out, our Qwen model is actually one of the most popular open source models in the world. And then at the application layer we have an e-commerce ecosystem — online shopping, grocery delivery, travel, maps — all of that where we can infuse and deploy AI for our users. So we're involved in all those stacks of technology and we think there are huge benefits to the full stack approach as opposed to just taking one layer. Because over time nobody can tell you right now where the value will accrue — which part of the stack. Is it chips, cloud, or the model? Right now pure model companies are very hot, they seem to accrue a lot of the value, but over time that may not be the case. So having an integrated approach of being involved in the full stack makes a lot of sense to us and that's our core strategy.
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Christoph Jacobiz9:51
That's very interesting. You're right, we don't really know where the value will be. But when you see the investment in infrastructure for AI, do you think there is kind of a bubble? Do we need all of that to make the models work? Because some models are more efficient than others and they need less capacity than others. So what about that?
J
Joseph Tsai10:12
I don't think so. The numbers really are quite astounding because if you just look at the American hyperscalers, the four or five companies combined will invest over $800 billion of capex and next year it's going to go to over a trillion dollars. It's eyepopping capex investment. And I think it's natural that people will ask whether there's going to be overcapacity. But again, we're trying to tackle a total addressable market of 50 trillion US dollars, and that's why we're optimistic. And in the China context, we're actually very underinvested in infrastructure and in the supply chain of AI. And so it actually behooves all the companies in China to step up their investment. Obviously we're not investing at the same level as some of the American hyperscalers, but it is still very substantial.
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Christoph Jacobiz11:16
Why don't you?
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Joseph Tsai11:18
Well, sometimes you're limited by your capital, you're limited by the free cash flow that you're generating. And the lucky thing is Alibaba is one of the very few companies that actually has a core business, which is e-commerce. We generate $25 billion of free cash flow every year from our e-commerce business that can fuel our investments in AI. So we're actually one of the better positioned companies out there.
C
Christoph Jacobiz11:45
I think today your business in marketplace is still 80-85% of your total?
J
Joseph Tsai11:52
Yeah, it is still 80 plus percent of our revenues in the e-commerce marketplace. We're very lucky that that business generates a cash flow that allows us to make future investments.
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Christoph Jacobiz12:04
To invest in AI and cloud business.
J
Joseph Tsai12:05
Yes, absolutely.
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Christoph Jacobiz12:06
What about the Qwen offer and the Qwen model? Because it's open source now. What kind of customers can you have and you can help with that?
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Joseph Tsai12:19
Well, I thought Maurice was too charitable in crediting me as behind the open source movement. That's totally untrue. I would say that our colleagues at Alibaba have worked the last several years pushing the open source movement in these frontier models to a high degree of success and we're continuing to do that. What's the significance of open source? I've been spending the last couple of weeks in Europe. And as I talk to European companies and CEOs and scientists, one of the biggest keywords here is sovereignty. But what is sovereignty? If you ask 10 Europeans about what sovereignty means, you'll get 12 different answers. But to me, they mean basically two things. One is technology independence. They are all worried about the kill switch — being reliant on some other country's technology, they could shut off the kill switch. We just saw a very live example of that in the recent days.
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Christoph Jacobiz13:32
Yeah, cable, right?
J
Joseph Tsai13:35
And the second is data privacy. People want to be able to use AI with data that's proprietary to them within their own environment, and hence build up the firewall to protect their own data. I think open source solves both problems because it is basically a free piece of software that you can download into your data center. You could download the Qwen model in your own notebook computer for example. And that's completely independent from the original maker. So if you use our open source Qwen model it will have nothing to do with Alibaba. We have to figure out how we charge for it, but we can't. So that's number one — independence. What's important is you can take the open source model and then you could take your own data and train it further, fine-tune it, do post-training of the model and keep all your data private within your own firewalls. And I think that's a really, really important point for companies in Europe to recognize — that open source is one of the approaches to achieve some degree of sovereignty. And today the open source movement is actually driven by Chinese companies. All the American players have closed sourced their models, so they want you to use their models through an API and you have no idea where your data is going when you're chatting with a chatbot. All of your most private questions and confessions go into some pool where they use that to further train their model.
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Christoph Jacobiz15:06
But to be honest, sovereignty is a very great concern today and I think we just realized how dependent we can be from the US or from China — from the industry for instance. I agree with the open model etc., but still we can be worried there is a bypass for the Chinese company to maybe one day cut the access or stop the model from functioning. How can we trust China, as we were surprised by the US in the last days? We could be surprised by China too. It's a big risk for Europe.
J
Joseph Tsai16:06
Yeah, you can't. That's the short answer, because you cannot be relying on a third-party government to say that they won't do something detrimental to you. But here's the thing. Right now, all of your eggs are in one basket. Why not get a second basket to put your eggs in two baskets? Even though Europe in the long term may develop their own basket, but at least now you have two baskets to put your eggs in.
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Christoph Jacobiz16:48
Maybe you can give an example of how you work with German companies like BMW or Siemens. What was the basis of the collaboration and cooperation you did with them?
J
Joseph Tsai16:59
Yeah, so these German manufacturing businesses are absolutely fascinating. They're all clients of ours — Alibaba Cloud in China, in their Chinese operations. And we work with them in the manufacturing context in terms of design, testing, quality control. We think that in the future this is going to be a very interesting segment, because today most of the application in AI — you have ChatGPT that's consumer, you have cloud code focused on coding and the knowledge worker space. But in the future, these manufacturing businesses are very valuable because they will have very valuable data that's proprietary to them in the manufacturing process. That data is very high-quality data that you can use to train your own model to improve your manufacturing process. And this is the approach we're taking with these companies. You mentioned BMW, Siemens — we've also worked with Bosch. Last week I was at the Bosch Connect World conference. We work with them because they are using AI to develop their assisted driving, autonomous driving, and that requires a lot of compute.
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Christoph Jacobiz18:33
So if I understand you, you consider the ban on certain class models by the US as an opportunity for your model to be adopted by other European customers.
J
Joseph Tsai18:49
Yeah, well, there's two approaches. One is they could just take our open source model and deploy that into their own infrastructure if they have their own data center. But our infrastructure is developed hand-in-glove with the model. So we actually have one of the most efficient infrastructures to help people train their models. So if they use our open source model they could also buy compute from us — that's a very symbiotic relationship between the model and infrastructure. Another approach is there are now emerging a number of companies that develop inference platforms that offer people a choice of models. You don't have to use Qwen, you could use somebody else's. They can also access closed source models as long as there's an agreement to open up the weights in a private context, and then customers can go onto these inference platforms to use the models.
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Christoph Jacobiz20:08
I have a more philosophical question about your vision of the future of AI — the balance between humans and agents, and even humanity. How do you see the next 10 years of humanity?
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Joseph Tsai20:24
So today I had a talk with the Alibaba Paris office colleagues. It's located in a beautiful building and I looked out the window. There's a café and people are sitting in the café outdoors because the weather is pretty nice, having a great time. And I point to them and I tell my colleagues: this is the future of AI. You may think they're drinking coffee and having a good time not doing anything, not being productive, but the reality is they have deployed agents that are doing the work. So when you're going to sleep you still have agents working for you. Think about the productivity gains if 24/7 you can actually have somebody else work for you.
C
Christoph Jacobiz21:18
So you have the same philosophy as people from Silicon Valley — you think many people won't work and we will make the agents and robots work for them.
J
Joseph Tsai21:34
Well, I think it'll definitely free up people's time to enjoy life, to enjoy their family, to do more entertainment. This is why I'm very big on live entertainment. When people spend less time in the office, where do they want to go? They don't want to just sit at home. They want to go to concerts. They want to go to football matches. They want to go to basketball games.
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Christoph Jacobiz21:57
Don't tell that to French people because they will want to work less.
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Joseph Tsai22:04
Well, a lot of them are focused on the World Cup right now.
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Christoph Jacobiz22:07
I think Chinese people work a lot. When you look at the Chinese engineers, they have lots of working hours even with agents, even with AI.
J
Joseph Tsai22:16
There will always be people that will work a lot more than others. But I think most of us want to be able to enjoy life a little bit, want to be able to spend time with our family more.
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Christoph Jacobiz22:27
I think you're a big fan of the Brooklyn Nets and even the New York Liberty. I think you even support a player — I don't even know — lacrosse? What about the soccer World Cup? Are you enjoying the soccer?
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Joseph Tsai22:46
Well, first of all, about basketball, I went to the French league championship game last night between Paris and Monaco. This is the second game of the five-game series, and I thought it was very interesting. And then I realized that our women's basketball team, the New York Liberty, have three French players — three players that play for the French national team. And then on the men's side, the Brooklyn Nets have one French player. So there's a lot of very big French connection. I think France is probably the most important non-American influence in the NBA and also in the WNBA today. So it's very interesting. About the World Cup, I don't have a horse in this race — that's the problem. I just saw some social media that says there's a Chinese referee in the World Cup and he is getting sponsorships. And I hope at some point China will have a strong team, but the development will take some time.
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Christoph Jacobiz23:53
Thank you very much. Thank you. Thanks to you. Thank you.