Alibaba's AI and cloud revenue surges 38% as company sacrifices profits for AI growth

Alibaba's AI and cloud revenue jump 38%

China's Alibaba said that growth accelerated for both its artificial intelligence and cloud businesses in the latest quarter, driven by the AI boom, even though overall revenue rose just 3% to 243 billion yuan ($36 billion). Revenue from its Cloud Intelligence Group, which focuses on cloud computing and AI developments, jumped 38% in the January-March quarter from a year ago to 41.6 billion yuan ($6.1 billion). That was faster than the 36% and 34% growth in the previous two quarters, respectively. However, Alibaba recorded an overall of 848 million yuan ($125 million) loss from operations for the quarter, a key measure of profitability of its core operating businesses, which was down sharply from a 28.5 billion yuan gain the same period last year. Growing technological investment was one of the main reasons for rising expenses that weighed on profitability, as technology companies globally race to invest to boost infrastructure in supporting the ballooning AI demand.

China's Alibaba Reports 38% Jump in AI and Cloud Revenue as It Races to Grow

HONG KONG (AP) -- China's Alibaba said that growth accelerated for both its artificial intelligence and cloud businesses in the latest quarter, driven by the AI boom, even though overall revenue rose just 3% to to 243 billion yuan ($36 billion). Revenue from its Cloud Intelligence Group, which focuses on cloud computing and AI developments, jumped 38% in the January-March quarter from a year ago. That was faster than the 36% and 34% growth in the previous two quarters, respectively. However, Alibaba recorded an overall of 848 million yuan ($125 million) loss from operations for the quarter, a key measure of profitability of its core operating businesses, which was down sharply from a 28.5 billion yuan gain the same period last year. Growing technological investment was one of the main reasons for rising expenses that weighed on profitability, as technology companies globally race to invest to boost infrastructure in supporting the ballooning AI demand. The Hangzhou-based company, which has about 130,000 employees, last year pledged investments of at least 380 billion yuan over three years in cloud computing and AI infrastructure. This week, Alibaba said it has fully connected its flagship Qwen AI app to its e-commerce platform Taobao, allowing users to "browse, compare, place orders, and manage deliveries through natural conversation" in hopes of driving up demand. It launched its "agentic" AI tool Wukong in March in expanding its products for commercial customers, and raised prices for some AI services. "Alibaba's AI has moved beyond the initial investment phase and progressed commercialization at scale," said CEO Eddie Wu on Wednesday in prepared remarks during an earnings call. Many technology companies are now facing the challenge of boosting AI-related revenue and proving that the huge investment costs can pay off. For Alibaba, "we should expect AI-related growth to accelerate further," said Jacob Cooke, CEO of Beijing-based consultancy WPIC Marketing + Technologies. In March, Alibaba pledged a goal of surpassing $100 billion in annual AI and cloud revenue within the next five years. Tencent, a key rival of Alibaba in AI, on Wednesday also reported weaker-than-expected revenue for the January-March quarter. Net profit was up 21%, which fell short of expectations, although some analysts believe its AI investments were also starting to deliver return. Capital expenditure across Chinese AI companies is likely to remain elevated as the "investment phase is far from over," wrote Chelsey Tam, an analyst at Morningstar, in a recent research note, while the AI firms are going to increasingly pivot from user acquisition to monetization.

Alibaba quarterly revenue rises on cloud demand, ecommerce growth

Alibaba's revenue climbed 3% driven by strong cloud and AI growth, with its China e-commerce unit boosted by government subsidies. Despite economic headwinds, the tech giant's enterprise AI platform shows promise. While cloud revenue exceeded expectations, overall revenue slightly missed estimates due to international e-commerce. China's Alibaba on Wednesday posted a 3% rise in fourth-quarter revenue on robust growth for its cloud computing and AI divisions, while its ecommerce unit benefited from a new round of government subsidies. US-listed shares of the company were up more ⁠than ⁠2% in premarket trading. Like other major tech giants, Alibaba too has benefited from soaring business demand for artificial intelligence. This year it rolled out an enterprise-focused AI platform that coordinates multiple AI agents to handle complex tasks, including editing documents, transcribing meetings and executing research. Revenue from Alibaba's Cloud Intelligence ⁠Group surged 38% to 41.63 billion yuan ($6.13 billion) from a year ago and was a touch ahead of estimates ⁠of 41.27 billion yuan. Consumer confidence in the world's second-largest economy has been fragile for years due to a prolonged property market downturn, while rising fuel prices due to the Middle East conflict have added to the cost of living. Still, China's e-commerce sector has seen some relief in the last quarter after a new round of subsidies from local governments that encouraged consumers to trade in electronic goods. Alibaba reported revenue of 122.22 billion ⁠yuan in its China e-commerce business, topping estimates of 119.85 billion yuan. Total revenue came in at 243.38 billion yuan ($35.84 billion) for the quarter ended March 31, missing an LSEG consensus estimate of 247.22 billion yuan, as the company's international e-commerce business lagged. ($1 = 6.7904 Chinese yuan renminbi)

Alibaba Sacrifices Profits to Fuel AI Growth | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Speaking during the company's earnings call for the quarter ended March 31, Wu said that AI-related product revenue now accounts for 30% of its Cloud Intelligence Group's revenue and that it will account for more than 50% in about a year. Alibaba Group's Cloud Intelligence Group, which includes what it calls "AI + Cloud" businesses, saw its revenue increase 40% year over year, according to a presentation released Wednesday. "Given the certainty of long-term AI demand and our full-stack technology advantages, we expect this trajectory to sustain strong growth over the medium to long term," Wu said. The group's AI revenue has seen triple-digit growth for 11 consecutive quarters. This has brought AI product revenue to where it accounts for 30% of the group's revenue, per the presentation. "We are at a pivotal inflection point in the evolution from conversational chatbots to autonomous AI agents, which is directly driving explosive growth across three core workload categories: training, inference and agent orchestration," Wu said during the call. "Against this backdrop, Alibaba's AI has moved beyond the initial investment phase and progressed commercialization at scale." Amid this growth, Alibaba Group's EBITDA fell by 61% year over year, which the company said was primarily attributable to its investment in technology businesses, quick commerce and user experiences, according to a Wednesday earnings release. Asked by an analyst how the company's management balances its aggressive AI spending against earnings stability, Wu compared it to investing in factories in order to profit from manufacturing in the future. "We see the ROI [return on investment] on this investment in the next three- to five-year period as being extremely clear," Wu said. Overall, during the quarter, Alibaba saw year-over-year revenue growth of 3%. When revenue is compared on a like-for-like basis, with revenue from two businesses that Alibaba sold (Sun Art and Intime) excluded, that figure rises to 11%, according to the earnings release. Alibaba Group's two eCommerce businesses, which it dubs "consumption businesses," grew at a slower pace. Alibaba China E-commerce Group and Alibaba International Digital Commerce Group each saw a revenue increase of 6% year over year, according to the presentation. Alibaba Group's "all others" segment saw its revenue drop by 21% year over year. The company said the decline was primarily due to its sale of Sun Art and Intime.

Alibaba reports continued profit squeeze from spending on AI and instant retail

China's Alibaba on Wednesday posted a three per cent rise in fourth-quarter revenue, but profits were pressured by growing investments in AI and cloud infrastructure, as well as ongoing spending on the quick commerce segment, which sees deliveries made within 60 minutes. Adjusted earnings per American Depository Share of 0.62 yuan fell way short of analyst estimates of 5.79 yuan and U.S.-listed shares of the company were down 2.3 per cent in premarket trading. Like other tech giants, Alibaba has benefited from soaring business demand for artificial intelligence. Revenue from Alibaba's Cloud Intelligence Group surged 38 per cent to 41.63 billion yuan ($6.13 billion) from a year ago, in line with estimates. In addition to big bets on AI assistants, Alibaba has also souped up its chatbot Qwen, which now allows users to shop at its online Taobao and Tmall marketplaces, talking with an agent from the Qwen chat window instead of navigating a range of product listings. The company earlier this year separated its AI businesses from its cloud computing arm and tasked CEO Eddie Wu with leading the newly formed "Alibaba Token Hub" group, as it races to make its AI efforts profitable. The company has said it is targeting more than $100 billion in combined external revenue from its AI and cloud divisions over the next five years. AI-related products account for 30 per cent of external customer revenue for the Cloud division, Alibaba said, which shows it is seeing return from its AI efforts, though those returns come at a cost. Excluding one-time items, Alibaba's net income for the quarter dropped 99.7% and adjusted EBITA decreased 84 per cent, which Alibaba attributed to the investment in its technology businesses as well as instant retail, which it refers to as "quick commerce." Alibaba reported revenue of 122.22 billion yuan ($18 billion) in its China e-commerce business, which includes the highly competitive quick commerce segment, topping estimates of 119.85 billion yuan. Total revenue came in at 243.38 billion yuan for the quarter ended March 31, missing an LSEG consensus estimate of 247.22 billion yuan, as the company's international e-commerce business lagged.