Thanks to the surge in artificial intelligence, China’s Alibaba Group reported a 34% increase in revenue from its cloud division in its most recent quarter.
However, the Chinese tech group’s overall revenue for the July-September quarter increased by just 5% year over year to 247.8 billion yuan ($35 billion), while profit decreased by 52% from the previous year due to a fierce price war in China’s e-commerce market, which included the food delivery sector.
Its e-commerce competitor, JD.com, revealed a 55% decline in net profit over the same quarter.
Alibaba began with e-commerce before shifting its attention to cloud and artificial intelligence technology.
It promised earlier this year to advance its cloud computing and AI infrastructure by investing at least 380 billion yuan ($53 billion) over the course of three years.
In prepared remarks on Tuesday, CEO Eddie Wu stated that the company’s “significant” investments in AI had contributed to its sales growth.
Compared to the 26% increase in the April–June quarter, the 34% growth in cloud revenue was more rapid.
Alibaba stated on Tuesday that the business’s “conviction in future AI demand growth is strong” and that the need for AI was “accelerating.”
In order to fulfill the increasing demand, the company is likely to invest more than the 380 billion yuan it had originally planned.
Alibaba announced on Monday that its improved AI chatbot, Qwen, had garnered 10 million downloads in the first week following its public release, aiming to compete with OpenAI’s ChatGPT.
Tuesday saw a 2% increase in the company’s Hong Kong shares and a 2.4% increase immediately before the New York Stock Exchange’s opening bell.
Shares have surged more than 90% so far this year, propelled by confidence over its advances in AI.
Since the IT company DeepSeek upended the market, Chinese companies have been gaining ground in AI, casting doubt on the dominance of their American competitors.
Other Chinese tech behemoths have released mixed earnings results recently.
Tencent, Alibaba’s AI competitor, announced this month that its revenue for the July–September quarter increased by a robust 15% year over year.
However, Alibaba’s rival in AI development, Baidu, had a 7% decline in sales in the same quarter over the previous year.
Although Nvidia’s impressive results last week somewhat allayed concerns, investors and analysts have been growing increasingly concerned about an exaggerated AI bubble.
