Alibaba Group reported a strong 34% rise in cloud business revenue for the July–September quarter, powered by soaring demand for artificial intelligence technologies.
However, the company’s overall performance grew at a slower pace. Total revenue increased only 5% year-on-year to 247.8 billion yuan ($35 billion), while profit tumbled 52% as aggressive price competition in China’s e-commerce and food delivery markets weighed on short-term earnings. Rival JD.com also saw its net profit drop 55% over the same period.
Once focused mainly on e-commerce, Alibaba has shifted heavily toward cloud services and AI. Earlier this year, it committed to investing at least 380 billion yuan ($53 billion) over three years to strengthen its AI and cloud infrastructure.
CEO Eddie Wu said Tuesday that heavy investments in AI were a major factor behind the cloud division’s rapid growth, which outpaced the 26% increase recorded in the previous quarter. The company noted that AI demand continues to rise sharply and hinted that total AI investment may ultimately exceed its initial 380 billion yuan target.
Alibaba also announced Monday that its upgraded AI chatbot, Qwen — pitched as a competitor to OpenAI’s ChatGPT — reached 10 million downloads within a week of its public release.
China's Alibaba sees revenue surge on back of artificial intelligence, e-commerce
Investor sentiment was positive: Alibaba’s Hong Kong-listed shares rose 2% on Tuesday, while its U.S.-listed shares climbed 2.4% before the New York trading session. The stock has surged more than 90% this year amid confidence in the company’s AI momentum.
Across the broader tech sector, Chinese firms have been rapidly advancing in AI, especially since startup DeepSeek disrupted the landscape and challenged U.S. dominance. Recent earnings have varied: Tencent posted a robust 15% revenue increase, while Baidu saw a 7% decline compared with last year.
Analysts, meanwhile, continue to warn of a potential AI bubble, though strong results from Nvidia last week provided some reassurance.
Source: AP