Alibaba Group reported a 34% jump in revenue from its cloud business in the July-September quarter, driven by strong demand for artificial intelligence (AI). The Chinese tech giant's overall revenue rose 5% year-on-year to 247.8 billion yuan ($35 billion), but profit fell 52% due to intense price competition in China's e-commerce sector.
Alibaba has shifted its focus from e-commerce to cloud computing and AI. Earlier this year, it pledged to invest at least 380 billion yuan ($53 billion) over three years in AI infrastructure. CEO Eddie Wu said the group's significant AI investments boosted revenue growth, with cloud revenue accelerating from 26% growth in the previous quarter.
The company expressed strong conviction in future AI demand and indicated it may exceed its planned investment. On Monday, Alibaba's upgraded AI chatbot Qwen recorded 10 million downloads in its first week. Alibaba's Hong Kong shares rose 2% on Tuesday, and US-listed shares gained 2.4% pre-market, with year-to-date gains exceeding 90%.
Chinese tech firms are gaining ground in AI following DeepSeek's disruption of the industry. Meanwhile, Tencent reported 15% revenue growth, while Baidu saw a 7% decline in the same quarter. Concerns over an AI bubble persist, though Nvidia's strong earnings last week provided some relief.
