Alibaba Cloud has reported a significant surge in revenue, driven by increasing demand for artificial intelligence (AI) solutions. The cloud computing division of the Chinese tech giant experienced a 34% year-over-year increase in revenue for the quarter ending September 2025, reaching 39.8 billion yuan. This growth underscores the company's successful strategic shift towards AI infrastructure and highlights the increasing importance of AI in the cloud computing market.
The impressive revenue growth of Alibaba Cloud outpaced the overall company's revenue increase of 5% for the same quarter. However, Alibaba's overall revenue for the July-September quarter increased by just 5% year-on-year to 247.8 billion yuan ($35 billion), and profit fell 52% from last year. This was partially offset by a 52% drop in profits due to fierce price wars in China's e-commerce sector. Despite the profit decline, investors have reacted positively to Alibaba's focus on AI, with share prices rising following the announcement.
Alibaba Cloud's success is closely linked to its investments in AI technology. The company has committed to investing at least 380 billion yuan ($53 billion) over three years to enhance its cloud computing and AI infrastructure. CEO Eddie Wu stated that these significant investments in AI have directly contributed to the company's revenue growth. In fact, revenue from AI-related products has seen triple-digit growth for nine consecutive quarters. AI-related sales now account for more than 20% of Alibaba Cloud's revenue. The company anticipates that it will likely increase its investment in AI to meet the rising demand.
Alibaba Cloud is focusing on providing AI infrastructure to various sectors, including finance, logistics, and manufacturing. As these industries increasingly implement and scale AI in their operations, they are relying on Alibaba to provide the necessary computing infrastructure and AI models. This is leading to stronger customer relationships and improved margins for Alibaba. A key component of Alibaba's AI strategy is its large language model (LLM), Tongyi Qianwen, which powers various applications such as customer service, office productivity, and e-commerce analytics. In November 2025, Alibaba announced that its upgraded AI chatbot Qwen had reached 10 million downloads within the first week of its public release.
Alibaba Cloud's growth is occurring within a competitive cloud market, dominated by major players like Amazon Web Services (AWS) and Microsoft Azure. While Alibaba Cloud's global market share has decreased slightly in recent years to 4% in Q4 2024, it remains the leading cloud provider in China with a 36% market share. Its localized support, compliance measures, and integration with Alibaba's e-commerce platforms make it a popular choice for businesses in China and the Asia-Pacific region.
