Alibaba's AI revenue run rate on track to hit $10B by September
What's the deal? Alibaba expects the annualised revenue run rate for its AI-related products to reach $10 billion in the quarter through September, chief executive officer Eddie Wu said on an earnings call Thursday. That would be up from $7.3 billion in the prior quarter.
Why now? Group revenue rose 9% in the quarter through June, driven mostly by 45% growth in its "AI cloud and compute services" segment. That business spans AI infrastructure, model services, and applications.
What's the endgame? Earlier this month, Alibaba launched a workplace AI agent called QwenWork. Wu said rising demand for AI agents is fuelling appetite for AI chips and traditional cloud services such as storage, database, and networking.
What could go wrong? The AI push is expensive. Capital expenditure in the June quarter surged 75% from a year earlier to nearly $10 billion as Alibaba, which operates China's biggest cloud provider, races to meet demand for compute.
Meanwhile, its core business is under pressure. Revenue from China e-commerce — Alibaba's largest source of income — fell 8% amid intense competition and weak domestic consumption.
The signal: Alibaba is betting that cloud and AI can offset a softening consumer market at home. The numbers show that shift accelerating, but the widening gap between AI growth and e-commerce decline underscores how much rides on the pivot paying off.
Read more: The Information
Image credit: Generated with OpenAI
