Via logodix.com
The Chinese tech giant's cloud division is riding a 12-quarter streak of triple-digit AI revenue growth, with plans to make AI the majority of its cloud business within a year.
Alibaba’s AI business is growing at a pace that makes its already-impressive cloud division look like a warm-up act. The company’s annualized AI-related product revenue has hit roughly RMB 35.8 billion, or about $5.2B, and management expects that number to keep climbing fast as AI products take over a larger share of its cloud portfolio.
The Cloud Intelligence Group posted 45% year-over-year revenue growth in the June quarter, fueled by AI-related products that have now delivered triple-digit year-over-year growth for twelve consecutive quarters.
The numbers behind Alibaba’s AI push #
Annual recurring revenue for AI model and application services is projected to surpass RMB 10 billion (roughly $1.4B) in the June quarter. By year-end, that ARR figure is expected to triple to RMB 30 billion, or approximately $4.3B.
AI-related products currently account for about 30% of external cloud revenue. Management believes that share will cross the 50% threshold within roughly one year.
Capital expenditures surged 75% in one quarter to approximately RMB 67.7 billion, or about $10B, with the vast majority going toward AI infrastructure and compute capacity.
CEO Eddie Wu’s strategic pivot #
The architect of this transformation is CEO Eddie Wu, who has made AI commercialization the company’s central strategic priority. Under his leadership, Alibaba established the Alibaba Token Hub (ATH) Business Group, which focuses on Model-as-a-Service, or MaaS.
China’s AI market is expanding rapidly as domestic companies, facing restrictions on access to the most advanced US chips, increasingly rely on Chinese cloud providers for AI compute. Alibaba, as the country’s largest cloud provider, is a natural beneficiary of that dynamic.
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