Alibaba’s latest earnings call brought an unusually candid message from CEO Eddie Wu, who suggested that the company may need to increase its AI spending even further as demand continues to accelerate across its cloud business. While investors initially focused on a sharp profit decline, the mood shifted once Alibaba detailed how quickly its cloud division is expanding and how heavily customers are leaning on its AI products.
Revenue rose to 247.8 billion yuan, up 5 percent from a year earlier, but the spotlight settled on cloud computing. That segment jumped 34 percent year over year to 39.8 billion yuan, a pace that marked its fastest acceleration in several quarters.
Wu credited this momentum directly to AI adoption, noting that “AI-related product revenue achieved triple-digit year-over-year growth for the ninth consecutive quarter.” He added that customer demand is now rising faster than the company can deploy new servers, a rare admission in a market defined by tight supply chains.
Alibaba has already committed 380 billion yuan over three years to AI and cloud infrastructure. However, Wu acknowledged that the company may need to stretch that number, saying the original target “might be on the small side.” He also stressed that AI resources will remain constrained, predicting that demand will outperform supply for at least the next three years. His comments offered a counterweight to concerns about a potential AI bubble. “We don’t really see much of an issue in terms of a so-called AI bubble,” he said, pointing to aging GPUs still running at full capacity.
Although Alibaba’s overall adjusted EBITA fell 78 percent because of its heavy investment in quick commerce, investors looked past the drop as they assessed the cloud division’s momentum and a rebound in China commerce revenue, which climbed 16 percent. Quick commerce revenue rose sharply as well, increasing 60 percent and lifting engagement on the Taobao app.
Despite the financial pressure, Alibaba appears committed to scaling the parts of its business that show the strongest long term demand. Wu’s message reflected a company preparing to lean even harder into AI as competition intensifies and capacity constraints tighten.
