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Wency Chen

Alibaba Group Holding’s heavy investments in artificial intelligence have moved beyond the “initial” phase and entered “full-scale commercialisation”, the Chinese e-commerce and cloud computing giant says in a shareholder letter as it doubles down on AI as its next major growth engine.
“We expect the addressable market for companies like Alibaba that provide full-stack AI capabilities is poised to grow exponentially,” chairman Joe Tsai and CEO Eddie Wu Yongming said in a joint shareholder letter issued on Wednesday.
“Today, we stand at a critical inflection point in the development of artificial general intelligence.”
The letter underscored Alibaba’s efforts to position itself as China’s leading full-stack AI provider. Its ecosystem spans the entire AI life cycle, from its proprietary T-Head chips and cloud infrastructure to model-as-a-service platforms and Qwen foundation models. Consumer-facing products include the Qwen app and the Wukong enterprise agentic AI platform.
Alibaba owns the South China Morning Post.
“What we’re building is China’s AI factory,” said Liu Weiguang, senior vice-president of the cloud computing unit, at Alibaba’s cloud summit in Hangzhou on Wednesday.

Liu described Alibaba as the only company in China operating across “all five layers of the full AI stack”, which cover chips, agentic cloud, AI models, model service platforms, and agentic applications.
According to Tsai and Wu, this infrastructure was designed for a future dominated by automated workflows.
“Vast numbers of AI agents are poised to take on an ever-greater share of work in the digital economy, each powered by tokens generated from models,” they wrote. “Agents will increasingly serve as the primary interface between humans and the digital world.”
The strategic pivot comes as Alibaba’s core commerce business faces headwinds. Domestic e-commerce revenue, excluding quick commerce and wholesale operations, slipped 1 per cent year on year to 96.3 billion yuan (US$14.2 billion) in the March quarter. The company said it was deploying AI to improve user acquisition and customer engagement.
By contrast, the Cloud Intelligence Group remained a bright spot. Last week, Alibaba reported total quarterly revenue of 243.4 billion yuan, with cloud revenues rising 38 per cent year on year to 41.6 billion yuan. External cloud revenue accelerated by 40 per cent.
For the first time, Alibaba disclosed quarterly revenue for AI-related products, which reached 8.97 billion yuan – the segment’s 11th consecutive quarter of triple-digit growth. AI-related products accounted for 30 per cent of cloud revenue.
Looking ahead, Alibaba said it expected annualised recurring revenue from AI models and applications to reach 30 billion yuan by year-end. AI products were on track to contribute more than half of cloud-computing revenue within the next year, management said at the earnings call.
Tsai and Wu said the company would scale up investment under a three-year, 380 billion yuan capital-expenditure goal.
Investors are watching closely if AI hyperscalers can sustain aggressive AI build-outs while turning those investments into durable returns.
US AI start-up Anthropic was on track to generate US$10.9 billion in annualised revenue in the second quarter, which could mark its first profitable quarter, The Wall Street Journal reported on Wednesday.
“With our talent, technology and resources, we are confident in seizing the moment to propel AI + Cloud into another growth engine for Alibaba,” Tsai and Wu wrote.


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Artificial intelligence (AI)

Alibaba signals next phase of AI growth from investment to commercialisation

Alibaba stands at a critical inflection point in the development of artificial general intelligence, according to a letter to shareholders. Photo:  AFP

Alibaba’s ecosystem spans the entire AI life cycle, from its proprietary T-Head chips and cloud infrastructure to model-as-a-service platforms and Qwen foundation models. Photo: Shutterstock

Alibaba unveils new Qwen model, custom chips in bid to become China’s ‘AI factory’

Alibaba Grouop Holdings unveiled its new large language model Qwen3.7-Max which it said will be a robust foundation for AI models on Wednesday. Photo: Handout

China ramps up building a national computing power network as AI token demand surges

Rather than treating computing power as a resource controlled by cloud providers or individual data centres, policymakers are increasingly positioning it as a national infrastructure system. Photo: Shutterstock

Rising AI model costs are beginning to weigh on developers and businesses, echoing the early days of the mobile internet when slow speeds and high charges later gave way to cheap, accessible mobile data after the roll-out of 4G and 5G networks. Photo: AFP

DeepSeek recruits former Jane Street engineer to catch up on AI agents, revenue race

Job postings have suggested that the harness team would be a core unit within DeepSeek. Photo: Shutterstock

The importance attached to AI harnesses has grown after Claude Code’s source code leaked in late March, underscoring the crucial role of the software infrastructure in building powerful agentic AI products. Photo: AP

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Chinese e-commerce and cloud computing giant forecasts 30 billion yuan AI revenue in 2026, with agents driving more than half of cloud sales


Chinese e-commerce and cloud computing giant forecasts 30 billion yuan AI revenue in 2026, with agents driving more than half of cloud sales.


Alibaba signals next phase of AI growth from investment to commercialisation

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Chinese e-commerce and cloud computing giant forecasts 30 billion yuan AI revenue in 2026, with agents driving more than half of cloud sales

Chinese e-commerce and cloud computing giant forecasts 30 billion yuan AI revenue in 2026, with agents driving more than half of cloud sales