HONG KONG (AP) – China’s Alibaba Group saw revenue from its cloud business rise 34% in the latest quarter, boosted by an artificial intelligence boom.
However, as fierce price competition in China’s e-commerce industry (including the food delivery sector) eroded short-term profitability, the China High-Tech Group’s overall sales in the July-September period rose 5% year-on-year to 247.8 billion yuan ($35 billion), while profits fell 52% year-on-year. E-commerce rival JD.com reported a 55% drop in net profit for the quarter.
Alibaba started in e-commerce and then focused on cloud and AI technology. Earlier this year, the company pledged to invest at least 380 billion yuan ($53 billion) over three years in evolving its cloud computing and AI infrastructure.
Chief Executive Officer Eddie Wu said in prepared remarks on Tuesday that the group’s “significant” investments in AI contributed to the revenue growth. The 34% increase in cloud revenue was faster than the 26% increase in the April-June period.
The company added that demand for AI is “accelerating” and that it has “strong confidence in future AI demand growth.” Alibaba also said on Tuesday that it would ultimately invest more than the planned 380 billion yuan to meet surging demand.
Alibaba on Monday announced that Qwen, its upgraded AI chatbot that aims to rival OpenAI’s ChatGPT, has been downloaded 10 million times in its first week.
The company’s Hong Kong shares rose 2% on Tuesday and were up 2.4% just before the opening bell of the New York Stock Exchange. The stock is up more than 90% so far this year, driven by optimism about advances in AI.
Since tech startup DeepSeek transformed the AI industry, Chinese companies have been increasing their positions in the field, raising questions about the dominance of their American rivals in the field.
Recent earnings reports from other Chinese tech giants have been mixed.
Tencent, which competes with Alibaba in the AI field, reported this month that its sales for the July-September period rose 15% year-on-year. However, Baidu, which also competes with Alibaba in AI development, recorded a 7% year-on-year revenue decline in the quarter.
Investors and analysts are increasingly worried about the AI bubble growing, but Nvidia’s strong financial results last week helped ease some of those concerns.
