2 days ago
22
Alibaba Group Holding Ltd has announced plans to significantly increase investments in artificial intelligence (AI) and cloud computing over the next three years, following stronger-than-expected third-quarter revenues.
The company’s US-listed shares surged 11% in early morning trading on the news.
Speaking to analysts, Alibaba Chief Executive Eddie Wu emphasised the transformative potential of AI. “AI is the kind of opportunity for industry transformation that only comes around once every few decades,” he said.
Wu added that Alibaba’s AI and cloud computing investments over the next three years will surpass those of the past decade, though he did not specify an exact figure.
For the quarter ended December 31, Alibaba reported revenue of 280.15 billion yuan ($38.58 billion), slightly exceeding analysts’ expectations of 279.34 billion yuan, according to a poll by LSEG.
A combination of strong year-end sales, international market demand, and increased consumer spending contributed to the company’s revenue growth.
The company also benefited from China’s annual Singles’ Day shopping festival, which ran longer than usual this year, boosting major e-commerce platform sales by 26.6%, according to data provider Syntun.
Alibaba’s domestic e-commerce unit, Taobao and Tmall Group, recorded a 5% revenue increase for the quarter. Executives stated that the division will continue prioritising market share stabilisation in the near term.
Alibaba’s strong start to 2025 has reinforced investor confidence in its AI strategy, pushing its share price up by more than 40% since the beginning of the year.
“When it comes to Alibaba’s AI strategy, we aim to continue to develop models that extend the boundaries of intelligence,” Wu said, suggesting AI could eventually “have significant influence on or even replace 50% of global GDP.”
Analysts have pointed to Alibaba’s role as a major player in cloud computing as a key driver of its AI ambitions.
“Alibaba has bagged a seat on the AI juggernaut and is now reaping rewards,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “It’s what is going on under the bonnet in terms of AI which is really moving the dial.”
Streeter added that Alibaba has “carved out a significant niche in the rapidly expanding world of cloud computing, providing the backbone for AI operations.” The company’s Cloud Intelligence Unit saw a 13% revenue increase in the quarter.
Alibaba is also expanding its AI ecosystem through strategic partnerships. It announced a collaboration with Apple to integrate its AI solutions into iPhones sold in China, bolstering its presence in a market where homegrown rival DeepSeek is gaining traction with cost-effective models.
In late January, Alibaba introduced an upgraded version of its Qwen 2.5 AI model, claiming it outperforms DeepSeek-V3.
The company’s international e-commerce segment, which includes AliExpress, Alibaba.com, and other regional platforms, continued its rapid expansion, posting a 32% revenue increase for the quarter.
Last November, Alibaba consolidated its domestic and international e-commerce operations under the Alibaba E-commerce Business Group, merging the Taobao and Tmall Group with Alibaba International Digital Commerce Group.
In an effort to sharpen its focus on core businesses, Alibaba has been shedding non-essential assets. In December, it sold off its department store chain Intime for a $1.3 billion loss.
Investor sentiment toward Alibaba has been further bolstered by the recent inclusion of co-founder Jack Ma in a meeting of private enterprise leaders chaired by Chinese President Xi Jinping.
Images of Ma shaking hands with Xi have been widely seen as a positive sign for the company’s standing in China’s business landscape.
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