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The
announcement of the ambitious target came as the company posted
a 67% drop in profit in the latest quarter, even as growth in
its cloud business remained robust.
For the October-December quarter, the company, which shifted its
focus to cloud and AI technologies in recent years, reported an
overall revenue increase of 2% year-on-year to 284.8 billion
yuan ($41.4 billion), lower than analysts’ estimates.
Revenue from its cloud business jumped 36% in the quarter to
43.3 billion yuan ($6.2 billion) from a year ago.
CEO Eddie Wu said during an earnings call on Thursday that
Alibaba stands to benefit from the “exponential growth in AI
demand.” It has been expanding and upgrading its flagship Qwen
AI app and consumer-facing chatbot and also provides cloud
computing and storage services to commercial customers.
“(There is) enormous and sustained growth momentum of the AI
market,” Wu said.
Profit for the quarter was 16.3 billion yuan ($2.4 billion),
down from 48.9 billion yuan the same quarter last year, in part
due to growing marketing and sales expenses.
The Hangzhou-based company, which started out in e-commerce, has
also seen a price war in the food delivery segment over the past
months adding pressure to its profitability.
Alibaba’s U.S.-listed shares fell more than 7% during midday
trading Thursday following the earnings results.
To help drive profit and amid rising costs and growing demand,
the company said on Wednesday it would be increasing prices for
some AI services by as much as 34%. It also launched the agentic
AI tool Wukong this week, in an expansion of its products for
commercial customers.
Alibaba’s AI ambitions was also tested recently following the
departure announcement this month by Lin Junyang, head of its AI
model division Qwen. Last year, the company pledged investments
of at least 380 billion yuan ($53 billion) in three years to
advance its cloud computing and AI infrastructure.
Chinese tech companies have been stepping up their
competitiveness against U.S. rivals and growing their dominance,
especially after AI startup DeepSeek sent shock waves across the
industry last year.
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