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The AI plot thickens
Alibaba just keeps leaning harder into AI, and the company’s latest numbers make it pretty clear this isn’t some side quest. CEO Eddie Wu said the company may blow past its planned 380 billion yuan capital spending target as demand for AI chips, cloud infrastructure, models and applications keeps heating up.
The quarter was messy, but the AI math is getting prettier
On paper, the results were a mixed bag: revenue rose 3% to $35.28 billion, while adjusted earnings per ADS missed expectations and adjusted EBITA dropped 84% as Alibaba poured money into AI, cloud capacity and e-commerce upgrades. In other words, the company hit the gym hard and forgot to stretch—earnings got flexed on, but the long-term muscle is the point.
The part investors are really watching is Alibaba Cloud. Revenue there jumped 38%, AI-related product revenue has now grown for 11 straight quarters at triple-digit rates, and AI products already make up about 30% of external cloud customer revenue. Wu also said AI models and applications could generate 30 billion yuan in annualized recurring revenue by year-end. That’s not pocket change; that’s a whole new line of business starting to look less like a science project and more like a profit center.
Why you should care
This is the kind of update that tells you where Alibaba thinks the next era of growth lives: not just in shopping, but in cloud computing and AI infrastructure. The catch? U.S. chip restrictions are still a real bottleneck, which means Alibaba can spend like a big dog and still have to operate with one paw tied behind its back.
Big picture: Alibaba isn’t trying to be a better e-commerce company anymore. It’s trying to become China’s AI backbone, and investors now have to decide whether that’s the future or just an expensive bet that takes longer to pay off.