Alibaba’s AI glow-up just got real

Alibaba’s new costume

Alibaba’s earnings call basically sounded like three big tech companies got merged in a lab coat. Management pitched the business as part Microsoft-style AI applications, part Amazon-style cloud, and part Nvidia-style compute bottleneck — which is a very fancy way of saying the company wants to sit in the middle of China’s AI boom and collect tolls.

The numbers are doing the talking

The core flex was in cloud. Alibaba said Cloud Intelligence Group external revenue growth accelerated to 40%, while AI-related product revenue has posted triple-digit growth for 11 straight quarters. Even more eyebrow-raising: AI-related products now make up 30% of external cloud revenue, and management thinks that could top 50% within about a year.

That’s not just a little momentum. That’s the sort of mix shift investors like to see when they’re hunting for a real AI engine instead of a company just slapping “AI” on a homepage banner.

Compute is the new gold rush

Then came the part that sounded straight out of the Nvidia playbook. CEO Eddie Wu said there isn’t a single card on Alibaba’s servers that’s idle, and that demand is outrunning supply. He also said the cost to deploy a new server this year is double what it was a year ago.

In investor-land, that’s both a brag and a warning label:

• brag, because demand is clearly strong
• warning label, because scaling this beast is getting expensive fast

Alibaba is also pushing its own T Head chips harder, with more than 60% of that compute capacity already serving external customers. So this isn’t just a cloud story anymore — it’s an infrastructure, chips, and AI-agent story wrapped in one giant China tech sweater.

Why you should care

If Alibaba can keep turning AI demand into cloud revenue, it could become one of the clearest beneficiaries of China’s AI buildout. But the catch is obvious: infrastructure is pricey, competition is fierce, and all that demand has to keep converting into profit, not just PowerPoint hype.

Big picture: Alibaba may be morphing into the kind of AI platform investors used to hope was hiding in plain sight — and now the numbers are starting to back up the costume change.