Alibaba Reports Strong Cloud Growth as AI Demand Surges

Alibaba reported strong cloud computing growth in its latest quarterly update, with results showing increased demand for artificial intelligence services. The company said Alibaba cloud growth helped cloud revenue accelerate at a faster pace than earlier this year. Investors responded positively, with shares rising in premarket trading. Business owners and entrepreneurs are watching these developments closely because cloud and AI services influence digital operations across many industries. The company continues to focus on expanding its technology capabilities to meet rising customer needs, further highlighting Alibaba cloud growth in global markets.

Revenue for the quarter rose 5% to 247.8 billion yuan compared with the same period last year. Cloud revenue reached 39.8 billion yuan, a 34% jump year over year and above market expectations. This growth rate was also faster than the previous quarter’s increase, emphasizing ongoing Alibaba cloud growth momentum. Executives said strong demand for AI-supported products continued to drive that momentum. The company also noted that AI-related product revenue grew at triple-digit rates for the ninth straight quarter.

AI Demand Drives Cloud Expansion

Alibaba said customer demand for its AI services is expanding quickly. The company noted that it is working to deploy new servers, but demand remains ahead of supply in some areas, which is directly linked to accelerating Alibaba cloud growth. Over the past year, Alibaba invested about 120 billion yuan to support AI and cloud infrastructure. Executives said this investment may increase if usage continues to rise. Earlier this year, Alibaba announced a long-term plan to strengthen its AI models and expand data center capacity, fueling additional Alibaba cloud growth opportunities.

The company’s Qwen app, powered by its own AI models, reached more than 10 million downloads within its first week of public release. Executives said strong adoption reflects interest in tools that support business tasks, development workflows, and digital operations. Earnings before interest, taxes, and amortization for the cloud division increased 35% to 3.6 billion yuan. The company said cloud computing remains a key growth area for workloads related to data processing, machine learning, and enterprise applications.

Supply Constraints Shape AI Infrastructure

Alibaba said demand for AI-ready chips and data center equipment remains high across the global technology supply chain. According to the company, graphic processing units used to run AI systems are operating at full capacity. This includes both newer models and GPUs that are several years old. Executives said the tight supply environment could continue for the next few years. Many businesses are adopting AI tools quickly, which increases the need for hardware capable of training and running these systems— a trend that continues to influence Alibaba cloud growth.

The company also said it does not see signs of a slowdown in AI usage. Executives noted that customer interest continues to grow as businesses incorporate automation, analytics, and intelligent tools into their operations. This trend supports the cloud division’s expansion plans. The company said it expects demand for AI infrastructure to remain higher than available supply for the foreseeable future, which will likely sustain Alibaba cloud growth over time.

E-Commerce and Quick Commerce Activity

While cloud computing remained strong, Alibaba also reported growth in its core e-commerce operations. Revenue from its China commerce division increased 16% year over year to 132.6 billion yuan. This segment includes Taobao, Tmall, and the company’s instant commerce services. Quick commerce, which focuses on fast delivery of select items, recorded 60% growth during the quarter. Executives said these services continue to attract new monthly active users on the Taobao app.

Investment in quick commerce has increased operating costs and affected overall adjusted EBITA, which fell 78% year over year to 9.1 billion yuan. However, the company said it views instant commerce as a long-term strategic area. Executives noted improvements in unit economics and continued expansion of the service’s customer base. The business group overseeing e-commerce said it aims to scale platform activity significantly over the next few years, while cloud operations continue to benefit from strong Alibaba cloud growth.