Alibaba's AI and Cloud-Driven Rebound: A 90% Growth Case by 2030?

In the ever-evolving landscape of global technology, Alibaba Group's strategic pivot toward artificial intelligence (AI) and cloud computing has reignited investor interest. With a 34% year-on-year surge in cloud revenue for the fiscal second quarter of 2025-reaching 39.8 billion yuan-the company is now at the forefront of a transformative phase according to CNBC. This growth, driven by triple-digit increases in AI-related revenue for nine consecutive quarters as reported, raises a compelling question: Can Alibaba's AI and cloud infrastructure expansion deliver a 90% growth in market value by 2030?

Strategic Investments and Market Leadership

Alibaba's dominance in China's AI cloud services market is underscored by its 35.8% market share in the first half of 2025, far outpacing rivals like ByteDance's Volcano Engine (14.8%) and Tencent Cloud (7%) according to Yahoo Finance. This leadership is underpinned by a $380 billion (380 billion yuan) three-year investment plan, with 80% allocated to data center expansion and upgrades as detailed in Enkiai's analysis. The company's focus on "full-stack AI capabilities" has already led to a 17.7% share of enterprise-grade large model token consumption in China according to Yahoo Finance, while its Qwen app achieved 10 million downloads within a week of its public beta release as reported by Alibaba Cloud.

Alibaba's competitive edge extends to cost efficiency. State-backed energy subsidies in China reduce power costs by up to 50% for data centers using domestic AI chips according to Enkiai's analysis, and proprietary technologies like liquid cooling have slashed Power Usage Effectiveness (PUE) to 1.200 by FY2024 as reported in Enkiai's analysis. These innovations, coupled with a pledge to power global data centers with 100% clean energy by 2030, position Alibaba to outperform peers in sustainability and operational scalability according to Enkiai's analysis.

Expert Projections and Financial Models

Analysts from JPMorgan and Jefferies have raised Alibaba's price targets to $245 and $230, respectively, citing triple-digit AI-related cloud revenue growth and improved cloud profitability according to Yahoo Finance. JPMorgan's broader AI industry report further contextualizes this optimism, noting that the sector must generate $650 billion in annual revenue by 2030 to achieve a 10% return on investments according to Tom's Hardware. While no single financial model explicitly projects a 90% growth in Alibaba's AI/cloud segment by 2030, the assumptions underpinning these forecasts-such as sustained enterprise demand for full-stack AI solutions and Alibaba's ability to monetize its ecosystem-suggest a high-growth trajectory according to Yahoo Finance.

Omdia's forecast adds weight to this narrative, predicting that China's AI cloud services market will double to 51.8 billion yuan ($7.3 billion) in 2025 and grow at a 26.8% annual rate through 2030 according to Yahoo Finance. Alibaba's international expansion plans, including new data centers in Brazil, France, and the Netherlands as announced by Alibaba Cloud, further amplify its potential to capture global AI demand.

Risks and Mitigation Strategies

Despite its momentum, Alibaba faces significant challenges. The $380 billion investment plan could strain near-term profitability, particularly as the company balances AI infrastructure costs with losses in its quick commerce and food delivery segments according to Yahoo Finance. Geopolitical risks, including U.S. export controls on advanced semiconductors and allegations of military ties according to Yahoo Finance, also pose regulatory and reputational threats.

To mitigate these risks, Alibaba has adopted a multi-pronged strategy. Its GPU pooling system reduces reliance on expensive NVIDIA H20 chips by up to 82%, lowering capital intensity according to Yahoo Finance. Additionally, partnerships with institutions like Nanyang Technological University (NTU) and Power Purchase Agreements (PPAs) for renewable energy as detailed in Enkiai's analysis underscore its commitment to innovation and sustainability. Analysts from Citi and Macquarie caution that Alibaba must demonstrate margin improvement in 2026 to justify its premium valuation according to Yahoo Finance, but the company's focus on AI-driven efficiency gains-such as the Qwen AI assistant for e-commerce-signals a path toward profitability according to Yahoo Finance.

Conclusion: A Plausible 90% Growth Scenario?

While no financial model explicitly projects a 90% growth in Alibaba's AI/cloud segment by 2030, the confluence of market leadership, strategic investments, and expert optimism creates a compelling case for long-term value creation. Alibaba's ability to navigate capital expenditures, geopolitical tensions, and competitive pressures will determine whether this ambitious target is achievable. For investors, the key lies in Alibaba's execution: Can it sustain triple-digit AI revenue growth while improving cloud margins? If so, the 90% growth scenario may not be a stretch but a logical extension of its current trajectory.