Alibaba Cloud Business Sees Strong Growth Boosted by AI
Alibaba has reported strong growth in its cloud computing segment, driven by major advances in artificial intelligence (AI). The Chinese tech giant said AI is now central to its strategy for expanding the cloud business. Revenue from the cloud unit jumped 26% to 33.40 billion yuan (around $4.67 billion), significantly ahead of the forecasted 18.4% rise.
Despite this, the company’s overall quarterly revenue fell short of expectations. Alibaba’s broader operations posted total revenue of 247.65 billion yuan for the quarter ending 30 June, missing the market estimate of 252.92 billion yuan.
Heavy AI Investment Paying Off
Group CEO Eddie Wu highlighted that Alibaba has invested over 100 billion yuan in AI infrastructure and product development across the past year. Speaking on a post-earnings call, Wu said the company is beginning to see real returns on these investments.
“Our investments in AI have begun to yield tangible results,” Wu noted. “We are seeing an increasingly clear path for AI to drive Alibaba’s robust growth.”
Alibaba is among China’s most active AI developers, frequently announcing upgrades to its platforms.
E-Commerce Faces Pressure from Rising Competition
Although Alibaba’s China E-commerce Group posted a 10% revenue rise, it was not enough to offset the overall revenue shortfall. This marks the first time Alibaba has released results for this group, which includes Taobao, Tmall, Ele.me, Fliggy, and a new instant commerce platform.
The company’s operating income fell 3% year-on-year, while adjusted earnings before interest, tax, and amortisation dropped 14%. These declines were mainly due to continued investments in its fast-growing instant commerce segment.
Competitors such as PDD Holdings and Meituan have also increased spending in a race to win market share in quick commerce. Executives from both companies warned this week that rising costs would affect profits in future quarters.
CFRA analyst Angelo Zino commented that Alibaba’s shift toward AI and quick commerce has changed operations significantly. However, he noted that spending on technology and user growth has impacted short-term profitability.
Growth Beyond China and Strategic Moves
Alibaba’s international commerce segment grew 19%, supported by market expansion in Europe and the Middle East. The company also announced a $349.8 million repurchase of shares in its logistics arm Cainiao from Fosun International.
Looking ahead, Alibaba aims to tap into China’s vast 30 trillion yuan e-commerce market. Jiang Fan, who leads the e-commerce group, projected that the quick commerce business could deliver 1 trillion yuan in extra annualised merchandise volume within three years.
with inputs from Reuters
