HONG KONG (AP) — China’s Alibaba Group reported a 34% surge in revenue from its cloud business in its most recent quarter, boosted by a boom in artificial intelligence.
But the Chinese tech conglomerate’s total revenue in the July-September quarter rose just 5% year-on-year to 247.8 billion yuan ($35 billion), and profit fell 52% from a year earlier, as a fierce price war across China’s e-commerce landscape – including in the food delivery segment – eroded short-term profitability. Its e-commerce rival JD.com reported a 55% decline in net profit in the same quarter.
Alibaba started with e-commerce and later shifted its focus to cloud and AI technologies. Earlier this year, it pledged to invest at least 380 billion yuan ($53 billion) over three years to advance its cloud computing and AI infrastructure.
CEO Eddie Wu said in prepared remarks Tuesday that the group’s “significant” investments in AI have helped its revenue growth. The 34% cloud revenue growth was faster than the 26% increase in the April-June quarter.
The company said that demand for AI is “accelerating” and that it “has strong confidence in future AI demand growth.” Alibaba said on Tuesday it would likely invest more than the planned 380 billion yuan in AI to meet growing demand.
On Monday, Alibaba announced that its advanced AI chatbot Quen – which aims to rival OpenAI’s ChatGPT – recorded 10 million downloads in the first week after its public launch.
The company’s Hong Kong shares rose 2% on Tuesday and shares rose 2.4% just before the opening bell on the New York Stock Exchange. Optimism over its progress in AI has led to shares rising more than 90% so far this year.
Chinese companies are gaining ground in AI after tech startup DeepSeek gave the industry a boost, casting doubt on the dominance of their American rivals in the field.
Recent earnings reports from other Chinese tech giants have been mixed.
Tencent, which rivals Alibaba in AI, this month reported a strong 15% year-on-year rise in its revenue for the July-September quarter. But Baidu, which competes with Alibaba in AI development, reported a 7% decline in revenue in the same quarter compared with a year earlier.
There are also growing concerns among investors and analysts about an overblown AI bubble, although Nvidia’s strong earnings last week may have eased concerns a bit.
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