Alibaba Cloud has announced a significant surge in revenue, driven by increasing demand for its artificial intelligence (AI) products and services. The cloud computing arm of the Chinese tech giant reported a 34% year-on-year increase in revenue, reaching 39.8 billion yuan ($5.6 billion), surpassing analyst expectations and marking its fastest expansion in the last four quarters. This impressive growth has boosted Alibaba's shares and solidified its position as a key player in the global cloud computing market.
The primary catalyst for this revenue surge is the escalating demand for AI solutions across various industries. Alibaba Cloud's AI-related products have achieved triple-digit year-over-year growth for nine consecutive quarters, demonstrating the company's sustained success in the AI arena. CEO Eddie Wu emphasized that enterprise customers are not just experimenting with AI but are making substantial investments, contributing significantly to Alibaba Cloud's financial performance.
Alibaba Cloud's commitment to AI is evident in its substantial investments in infrastructure, including advanced chips, data centers, and software tools. The company has already invested 120 billion yuan ($16.8 billion) in AI and cloud infrastructure over the past four quarters. This is in addition to its previously announced three-year investment plan of 380 billion yuan ($53 billion). These investments are designed to enhance Alibaba Cloud's AI capabilities and support the growing demand for AI-powered applications and services.
Alibaba Cloud's AI prowess is exemplified by its Qwen app, a large language model (LLM) similar to OpenAI's ChatGPT. Qwen has gained significant traction, exceeding 10 million downloads within its first week of launch. Furthermore, Alibaba's open-source Qwen models have led to over 180,000 derivative models on Hugging Face as of October 31, 2025. The company is observing increasing adoption of its AI products among enterprise customers, with a particular focus on value-added applications like coding assistants.
Alibaba Cloud is actively expanding its market presence both domestically and internationally. The company aims to build a unified global cloud network, enabling businesses to access consistent AI infrastructure worldwide. It is focusing on strategic markets such as Japan, South Korea, Southeast Asia, the Middle East, Europe, and the Americas. Alibaba Cloud currently operates 87 availability zones across 29 regions, with recent additions including a new region in Mexico and a second data center in Thailand.
Despite the impressive revenue growth, Alibaba's overall profitability has experienced some challenges. The company's adjusted EBITA decreased by 78% year-on-year to 9.1 billion yuan, which Alibaba attributed to investments in quick commerce. Additionally, the company's GAAP net income decreased by 53% to RMB 20.6 billion. However, investors are primarily focused on the accelerated growth in Alibaba's cloud computing and core China e-commerce divisions.
Looking ahead, Alibaba Cloud is expected to continue its expansion in AI services, targeting emerging markets and sectors like autonomous vehicles, smart cities, and health tech. CEO Eddie Wu has indicated that Alibaba may increase spending on AI beyond initial projections if demand remains robust. The company anticipates further capital expenditure scaling beyond its initial RMB 380 billion plan, emphasizing improvements in foundation model capabilities and inference services. While some analysts have raised concerns about a potential AI bubble and the profitability of AI investments, Alibaba remains confident in the long-term growth potential of its AI and cloud businesses.
