Chinas Alibaba reports 38% jump in AI and cloud revenue as it races to grow
HONG KONG — China’s Alibaba said growth accelerated in both its AI and cloud businesses in the latest quarter, driven by the AI boom, but overall revenue rose only 3% to 243 billion yuan.
Revenue from the Cloud Intelligence Group, which focuses on cloud computing and artificial intelligence developments, rose 38% in the January-March quarter from a year ago. This was faster than the growth of 36 percent and 34 percent in the previous two quarters, respectively.
However, Alibaba recorded a total operating loss of 848 million yuan in the quarter; This is a key measure of the profitability of its core businesses, which was down sharply from earnings of 28.5 billion yuan in the same period last year.
Increased technological investment was one of the main reasons why rising expenses were putting pressure on profitability, as technology companies raced to invest in strengthening infrastructure to support growing demand for artificial intelligence globally.
The Hangzhou-based company, which has about 130,000 employees, last year pledged to invest at least 380 billion yuan in cloud computing and artificial intelligence infrastructure over three years.
This week, Alibaba said it had fully connected its flagship Qwen AI app to e-commerce platform Taobao, allowing users to “browse, compare, order and manage deliveries through natural conversation” in the hope of driving demand. To expand its offerings for business customers, it launched “agency” AI tool Wukong in March and raised prices for some AI services.
“Alibaba’s AI has moved beyond the initial investment phase and advanced commercialization at scale,” CEO Eddie Wu said in prepared remarks during an earnings call on Wednesday.
Many technology companies now face the challenge of increasing AI-related revenue and proving that they can recoup their large investment costs. “We should expect AI-related growth to accelerate further,” Jacob Cooke, CEO of Beijing-based consultancy WPIC Marketing Technologies, said of Alibaba.
In March, Alibaba promised a goal of surpassing $100 billion in annual AI and cloud revenue over the next five years.
Tencent, a key Alibaba rival in AI, also reported weaker-than-expected revenue for the January-March quarter on Wednesday. Net profit rose 21%, which fell short of expectations, but some analysts believe AI investments are also starting to yield returns.
Analyst Chelsey Tam of Morningstar wrote in a recent research note that capital expenditures at Chinese AI companies are likely to remain high because “the investment phase is not over yet”; Meanwhile, artificial intelligence companies will increasingly look to make money without acquiring users.
This article has been generated from an automated news agency feed without modifications to the text.
