AI Drives 26% Revenue Growth in Alibaba’s Cloud Division

Artificial intelligence-related products led Alibaba Group’s gains during a quarter in which the global technology company earned double-digit year-over-year revenue growth across its businesses.

Overall, during the quarter ended June 30, Alibaba reported year-over-year revenue growth of 2%, or 10% when revenue from two businesses it sold over the past year is excluded, according to a Friday (Aug. 29) earnings release.

The company said in a presentation released Friday that it is “embarking on a new chapter of entrepreneurship by investing in two strategic pillars of consumption and AI + Cloud.”

Alibaba’s cloud division earned 26% year-over-year revenue growth. The division’s gains were driven in part by its customers’ increasing adoption of AI-related products, according to the release.

“During the quarter, AI-related revenue accounted for over 20% of revenue from external customers as AI demand continued to grow rapidly,” Alibaba Group CEO Eddie Wu said Friday during the company’s quarterly earnings call. “We’re also seeing AI applications driving great growth momentum of traditional products, including compute and storage.”

The company’s Alibaba International Digital Commerce Group (AIDC) delivered 19% year-over-year revenue growth. The group’s cross-border business was especially strong, and its international wholesale platform gained new monetization opportunities as more merchants adopted its AI-powered tools for marketing, procurement and product listing, the release said.

Alibaba’s third business, its China E-Commerce Group, saw a 10% gain in year-over-year revenue growth. This increase was helped by gains in consumer use of the group’s Taobao app after Alibaba launched the Taobao Instant Commerce service at the end of April, per the release.

A company executive said in May that Alibaba launched “instant commerce,” a fast delivery service, because there is huge demand in China for fast delivery and because the company has the merchant base and logistics capabilities to meet that demand.

The company’s fourth business, “all others,” saw a 28% year-over-year decline in revenue, which Alibaba attributed to its sale of Sun Art and Intime.

An Alibaba executive said in July that the company was paring away non-core businesses and focusing on eCommerce and cloud computing.

Alibaba also reported in the earnings release that Ant Group, in which Alibaba is an investor, contributed 1.5 billion yuan (about $216 million) in profit during the quarter, down from 3.9 billion yuan a year earlier.

Alibaba attributed the decline to Ant Group’s “investments in new growth initiatives and technologies, and the decrease in fair value of certain investments.”

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