Alibaba: to increase cloud adoption for AI

Alibaba: to increase cloud adoption for AI

Alibaba Group has been making significant strides in its AI cloud services, aiming to increase cloud adoption for AI. In Q4 2025, Alibaba Cloud's AI services drove an 18% revenue growth, fueled by triple-digit expansion in tools like Qwen3 and Lingma coding assistant [1]. This growth underscores Alibaba's ability to leverage AI as a growth engine, despite navigating a fiercely competitive market.

Alibaba's AI monetization strategy hinges on a dual approach: aggressive price cuts to drive adoption and ecosystem integration to lock in long-term value. The company slashed API pricing by up to 97% to compete with rivals like Baidu and ByteDance, a move that boosted usage but compressed margins [3]. While this strategy risks short-term profitability, it aligns with Alibaba’s broader vision of establishing AI as a foundational layer for its e-commerce and financial services. For instance, Qwen3’s dynamic “thinking” and “non-thinking” modes are being integrated into core platforms like Taobao and Alipay, creating cross-sell opportunities [4].

Despite 4.3% QoQ cloud revenue slowdown and consumer resistance to paid AI subscriptions, analysts project a 21% CAGR for Alibaba’s AI segment through 2027 [1]. Alibaba Cloud’s dominance in China’s AI cloud market—33% share in Q2 2025—is a critical differentiator [1]. Its ecosystem integration, including partnerships with Apple and HONOR to embed AI into mobile devices, strengthens its moat. Globally, Alibaba Cloud holds 4% of the market, trailing AWS (30%) and Microsoft (20%) but outpacing Google Cloud (13%) [5]. Its open-source AI models, such as Qwen3, have attracted 90,000 enterprises, creating a developer ecosystem that rivals like AWS and Baidu struggle to replicate [3].

The price of Sui (SUI) surged by 2.1% following the announcement of an AI coding assistant built for developers using the Move language. This tool, developed by Sui Network and Alibaba Cloud, supports English, Chinese, and Korean, making it accessible to a global developer base [2]. The new assistant includes intelligent autocompletion, real-time security checks, and automated documentation, simplifying the coding process inside ChainIDE.

Alibaba's strategic moves to increase cloud adoption for AI are a calculated bet. The company's forward P/E of 12.92 and analyst forecasts suggest optimism about its long-term potential, despite near-term margin pressures [4]. As the line between AI innovation and commercial viability blurs, Alibaba’s ability to balance aggressive pricing with strategic integration may determine whether this is a fleeting rebound or a sustainable turnaround.

References:
[1] https://www.ainvest.com/news/alibaba-ai-cloud-growth-strategic-buy-opportunity-market-challenges-2508/
[2] https://coinedition.com/sui-alibaba-cloud-ai-coding-assistant-move-developers-benefit/
[3] https://finance.yahoo.com/news/chinese-ai-model-developers-push-093000387.html
[4] https://www.ainvest.com/news/alibaba-ai-cloud-resurgence-market-finally-recognized-2508/
[5] https://www.crn.com/news/cloud/2025/cloud-market-share-q2-2025-microsoft-dips-aws-still-kingpin