Alibaba Group reaffirmed its commitment to long-term technical innovation by announcing on Monday plans to invest at least US$53 billion over the next three years to develop its cloud computing and artificial intelligence infrastructure.
The investment highlights Alibaba’s focus on AI-driven growth and its position as a top global cloud provider. It surpasses Alibaba’s entire spending on AI and cloud over the previous ten years.
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Alibaba CEO Eddie Wu referred to artificial intelligence (AI) as a “once-in-a-generation” opportunity during the company’s most recent earnings call. Artificial General Intelligence is the company’s main long-term goal.
Wu discussed how AI’s capacity to mimic human mental and physical labour could drastically alter international businesses and bring about important technological and economic changes.
An increasing proportion of AI-generated data will be processed and dispersed through cloud networks as AI models advance; this trend places Alibaba Cloud in a prominent infrastructure provider position.
Alibaba Group reports $6.36bn profit in 2024
AliExpress’s parent company, Alibaba Group reported on Friday a 33 percent increase in net income to $6.36 billion for the quarter ended December 31, 2024.
The Chinese e-commerce behemoth reported an eight percent increase in total revenue to $38.4 billion, citing operational efficiencies and steady e-commerce growth. Operating income increased 83 percent to $5.65 billion, helped by improved profitability and lower impairment charges on intangible assets.
CEO Eddie Wu of Alibaba Group stated, “This quarter’s results demonstrated substantial progress in our ‘user first, AI-driven’ strategies and the re-accelerated growth of our core businesses. During this quarter, customer management revenue at Taobao and Tmall Group grew nine per cent as a result of initiatives to enhance user experience and effective monetisation.”
“Our cloud revenue growth reignited to double digits at 13 percent, with AI-related product revenue achieving triple-digit growth for the sixth consecutive quarter. Looking ahead, revenue growth at Cloud Intelligence Group driven by AI will continue to accelerate. We will continue to execute against our strategic priorities in e-commerce and cloud computing, including further investment to drive long-term growth,” he added.
The Chief Financial Officer of the company, Toby Xu, said, “During the quarter, we continued to actively manage our balance sheet with significant non-core asset sales, share buybacks, and extending our debt maturities at attractive rates.”
Alibaba repurchased $1.3 billion worth of shares during the quarter and actively sold off non-core assets for up to $2.6 billion as part of its capital management strategy, providing value to shareholders.
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Alibaba’s most obvious source of Artificial Intelligence revenue
Wu underlined that with the growing demand for AI hosting services, cloud computing continues to be Alibaba’s most obvious source of AI revenue.
Dales from Alibaba’s Cloud Intelligence Group, excluding sales from Alibaba-consolidated companies, increased 11 percent year over year in the most recent quarter.
Meanwhile, revenue from AI-related products increased by triple digits for the sixth consecutive quarter.
Application of artificial intelligence
According to the corporation, artificial intelligence (AI) will become more and more important in consumer applications, enterprise services, and e-commerce, improving productivity, user engagement, and business innovation.
Chairman Joe Tsai and CEO Eddie Wu described Alibaba’s strategic shift to a “user-first, AI-driven” approach in their May 2024 shareholder letter.
The company plans to integrate AI throughout its ecosystem to improve customer experiences, streamline corporate processes, and support long-term growth.
Alibaba said that this investment would surpass all of its previous 10 years’ expenditures on cloud computing and artificial intelligence. As a leader in China’s AI competition, the company has drawn investors with smart commercial partnerships, which has caused its stock to increase by more than 68 percent this year.
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