Alibaba Group, the largest technology company in China, announced on Thursday that it will use the surge in AI demand to drive its aim of exceeding $100 billion in revenue from its cloud and AI operations over the next five years.
Despite strong development in its cloud business, the company reported a 67% decline in earnings in the most recent quarter, which coincided with the announcement of the lofty goal.
The company, which has recently moved its attention to cloud and AI technologies, reported an overall sales gain of 2% year over year to 284.8 billion yuan ($41.4 billion) for the October–December quarter, which was less than experts had predicted.
Its cloud business generated 43.3 billion yuan ($6.2 billion) in revenue during the quarter, a 36% increase over the same period last year.
During a Thursday results call, CEO Eddie Wu stated that Alibaba will profit from the “exponential growth in AI demand.”
In addition to offering cloud computing and storage services to business clients, it has been growing and improving its flagship Qwen AI software and consumer-facing chatbot.
“The AI market has a tremendous and steady growth momentum,” Wu stated.
Due in part to rising marketing and sales costs, the quarter’s profit was 16.3 billion yuan ($2.4 billion), down from 48.9 billion yuan during the same period previous year.
Over the past few months, the Hangzhou-based business, which began in e-commerce, has seen pressure on its profitability due to a price war in the meal delivery market.
Following the earnings reports, Alibaba’s U.S.-listed shares dropped more than 7% during lunchtime trading on Thursday.
The business announced on Wednesday that it will be raising pricing for some AI services by up to 34% to boost profit in the face of growing demand and rising costs.
This week, it expanded its product line for business clients by introducing the agentic AI tool Wukong.
Lin Junyang, the chief of Alibaba’s AI model section Qwen, announced his leave this month, putting the company’s AI aspirations to the test.
To improve its cloud computing and AI infrastructure, the business committed to investing 380 billion yuan ($53 billion) over three years last year.
After AI company DeepSeek shocked the industry last year, Chinese tech giants have been increasing their dominance and competitiveness against U.S. rivals.
