Alibaba – Our Story Insight

Alibaba shares jump 19% on cloud unit growth, report of new AI chip

admin — Tue, 02 Sep 2025 01:37:13 +0000

Signage at the Alibaba Group Holding Ltd. headquarters in Hangzhou, China, on Thursday, Feb. 6, 2025.

Qilai Shen | Bloomberg | Getty Images

Alibaba‘s Hong Kong listed shares surged more than 19% on Monday as the Chinese tech giant’s cloud computing unit drove strong quarterly results, while details emerged over its new AI chip development.

It’s the highest level for the stock since March. Investors have backed the company’s improving performance in its key cloud unit and are content with the the tech giant’s investment into new areas — particularly in the so-called “instant commerce,” which has become incredibly competitive in China.

The Hong Kong rally builds on the momentum of Alibaba‘s earnings report of Friday, when the company’s New York-listed shares closed nearly 13% higher.

Alibaba last week week posted revenue for the June quarter of 247.65 billion Chinese yuan ($34.73 billion), marking a 2% year-on-year rise that nevertheless missed analyst expectations. On the upside, a 78% annual surge in net income came in ahead of forecasts.

The Chinese company’s cloud computing unit was a bright spot with revenue picking up by an annual 26%, which was a faster growth rate than seen in the previous quarter. Alibaba’s cloud growth has been accelerating over the last few quarter.

Like some of its Chinese and U.S. tech rivals, Alibaba has been investing in AI infrastructure and developing its own models, as well as selling AI services for its cloud computing unit. Investors see the division as key to the company’s efforts to monetize artificial intelligence, much like Microsoft or Google.

AI-related product revenue “maintained triple-digit year-over-year growth for the eighth consecutive quarter,” the company said Friday.

That same day, CNBC reported that Alibaba is developing a new AI chip, which also supported the share price rally on Monday.

Alibaba’s core e-commerce business has meanwhile been showing signs of revival, while the company has jumped into China’s cut-throat instant commerce space in China. This is a feature introduced this year on Taobao, one of Alibaba’s main Chinese e-commerce apps, which provides deliveries of certain products in China within an hour.

Investments in quick commerce weighed on Alibaba’s adjusted earnings for its e-commerce business. Investors have given the company some leeway to invest for now.

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Coffee at 30 cents escalates into billion-dollar burn for JD.com, Meituan, and Alibaba

admin — Mon, 14 Jul 2025 00:46:49 +0000

A Meituan food delivery courier rides an electric scooter in Chongqing, China, on March 29, 2025.

Cheng Xin | Getty Images News | Getty Images

In China’s fiercely competitive market, the latest price war is playing out in the growing “instant commerce” sector, where companies are launching massive subsidies and other incentives to get consumers to spend.

The ‘instant commerce’ sector is backed by massive networks of scooter drivers that quickly transport everything from food and drink to fast fashion and gadgets.

The space is mostly occupied by three main players, including the established e-commerce heavyweights JD.com and Alibaba, as well as delivery platform Meituan, which has historically focused heavily on food delivery.

Competition between these companies has intensified this year, with all three expanding their delivery networks and pledging billions in subsidies to merchants and consumers.

The result — insanely fast and cheap offers. Perusing through JD.com’s delivery platform on Friday, CNBC found coffee as cheap as 10.9 yuan, or $1.50, including delivery fees. Meituan was offering a 13 yuan set of steamed buns and a 26.8 yuan McDonald’s breakfast set.

However, despite the benefits for Chinese consumers, the price war has also weighed heavily on investors and the earnings outlook. Meituan and JD.com, for example, have seen their shares fall by about 22% and 10%, respectively, this year, according to LSEG data.

How did we get here?

China’s e-commerce players have consistently competed on delivery times, supported by the country’s large labor force and gig economy. By building out a strong logistics network, JD had set a standard in the market for same-day or next-day delivery of packages, pressuring competitors like Alibaba.

However, China’s latest ‘instant commerce’ battle appeared to start after JD.com’s move into the takeout dining market in February, entering a space dominated by Meituan, the market leader, and Alibaba’s food delivery platform Ele.me.

A delivery rider wearing a JD Logistics uniform adjusts his helmet while sitting on an electric scooter beside a Meituan delivery box, with several other delivery workers nearby, on May 26, 2025, in Chongqing, China.

Cheng Xin | Getty Images News | Getty Images

Then, in April, Meitaun launched its own challenge to JD.com with a new 24/7 “flash shopping” platform that included categories like groceries, alcohol, and electronics and promised deliveries within 30 minutes.

Tensions grew as the companies engaged in direct competition. Eventually, both companies accused each other of using anti-competitive practices to block riders from accepting orders on rival platforms. It was around that time when JD began hiring more full-time drivers, and founder Richard Liu was photographed delivering food orders in Beijing in a viral publicity stunt.

That month also saw JD.com announce a first round of subsidies worth 10 billion yuan, which went towards a food delivery discount program.

Subsidies and massive discounts are commonplace in China’s competitive tech sector, and a cause for concern for Beijing.

China’s top market regulator summoned JD.com, Meituan, and Alibaba’s Ele.me in May, urging them to follow the law and compete fairly. Retail groups also voiced concerns about JD.com’s subsidy program and the knock-on effects of plummeting prices. However, the pushback had little effect on slowing the price war.

On Tuesday, JD.com announced yet another 10 billion-yuan investment under its “Double Hundred Plan,” intended to provide targeted support to merchants on the platform.

It came after Alibaba’s Taobao Instant Commerce announced on Saturday a subsidy program valued at 50 billion yuan (about $7 billion), to be distributed over the next year. It added that it had reached 200 million orders per day shortly after.

The same day, discounts and coupons offered on Meituan had seen prices of a cup of coffee drop to as low as 2 yuan ($0.28), according to local media.

As a result, the company said that it received a record 120 million orders that Saturday — so much that it suffered a temporary breakdown of its servers in certain areas.

While all the companies have boasted about increases in their instant commerce user bases in recent months, it remains unclear how much the price war will impact their earnings.

Meituan reported that its profits for the first quarter of 2025 were 10.2 billion yuan, up about 63% year over year. However, it warned that the following quarter would likely be impacted by increased competition in instant retail.

In May, JD.com reported that its operating profit rose by 31.4% year over year to 11.7 billion yuan in the first quarter of 2025. However, economists polled by LSEG expect second-quarter profits to fall on both a yearly and quarterly basis.

JD’s push into food delivery may have generated a loss of more than 10 billion yuan in the second quarter, according to Nomura’s analysis published Thursday. The analysts estimate JD has gained about 10% of the instant delivery market with 20 million orders a day.

Looking ahead, “we think JD may have to re-examine its ambition,” the analysts said. They pointed out that in light of Alibaba’s ramped-up spending on subsidies, JD might have to burn through all the profits generated by its core retail business — for several quarters — if it wants to compete with the two market incumbents.

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Apple’s Alibaba A.I. Deal Provokes Washington’s Resistance

admin — Sat, 17 May 2025 10:41:31 +0000

Apple believes the future success of the iPhone depends on the availability of new artificial intelligence features. But tensions between Washington and Beijing may cripple the tech giant’s plans to deliver A.I. in its second-most-important market, China.

In recent months, the White House and congressional officials have been scrutinizing Apple’s plan to strike a deal with Alibaba to make the Chinese company’s A.I. available on iPhones in China, three people familiar with the deliberations said. They are concerned that the deal would help a Chinese company improve its artificial intelligence abilities, broaden the reach of Chinese chatbots with censorship limits and deepen Apple’s exposure to Beijing laws over censorship and data sharing.

The scrutiny is the latest example of the challenges that Apple has run into as it tries to sustain its businesses in the United States and China at a time of rising geopolitical tensions. Three years ago, the U.S. government succeeded in pressuring the company to abandon a deal to buy memory chips from a Chinese supplier, the Yangtze Memory Technologies Corporation, or YMTC. More recently, the company has been challenged by U.S. tariffs on Chinese-made products like the iPhone, threatening to cut into the company’s profits.

Walking away from an Alibaba deal would have far graver consequences for Apple’s business in China, which accounts for almost a fifth of the company’s sales. The partnership with the Chinese tech company is critical to bringing A.I. features to iPhones in one of the world’s most highly regulated and competitive markets. Without the Alibaba partnership, iPhones could fall behind smartphones from Chinese rivals like Huawei and Xiaomi.

Officials at the White House and the House Select Committee on China have raised the deal directly with Apple executives, said the three people, who spoke on the condition of anonymity because they were not authorized to speak to the media. During meetings in Washington with senior Apple executives and lobbyists, government officials asked about terms of the deal, what data Apple would be sharing with Alibaba and whether it would be signing any legal commitments with Chinese regulators. In the meeting with the House committee in March, Apple executives were unable to answer most of those questions, two of these people said.

Washington’s concern about the deal has been heightened by a deepening conviction that A.I. will become a critical military tool. The technology, which can write emails and develop software code, has the potential to coordinate military attacks and control autonomous drones. Worried about a future U.S.-Chinese conflict, Washington officials have tried to limit Beijing’s access to A.I. technology, cutting off its ability to make and buy A.I. chips.

Representative Raja Krishnamoorthi of Illinois, the ranking Democrat on the House Permanent Select Committee on Intelligence, said in a statement that it “is extremely disturbing that Apple has not been transparent about its agreement.”

“Alibaba is a poster child for the Chinese Communist Party’s military-civil fusion strategy, and why Apple would choose to work with them on A.I. is anyone’s guess,” he said. “There are serious concerns that this partnership will help Alibaba collect data to refine its models, all while allowing Apple to turn a blind eye to the fundamental rights of its Chinese iPhone users.”

Apple, the White House and Alibaba did not provide comment. Apple hasn’t publicly acknowledged the A.I. deal in China, but Alibaba’s chairman, Joe Tsai, confirmed it publicly in February.

There is concern in Washington that an Apple deal with Alibaba would set a problematic precedent. U.S. companies could help Chinese A.I. providers reach more users and use the data they collect from those users to improve their models. The risk would be that Baidu, Alibaba, ByteDance and other Chinese companies could then use those improvements to help China’s military.

To limit U.S.-Chinese collaboration, the Trump administration has discussed whether Alibaba and other Chinese A.I. companies should be put on a list prohibiting them from doing business with U.S. companies, the people familiar with the deliberations said. Defense Department and intelligence officials have also been scrutinizing Alibaba’s ties to the Chinese Communist Party and the People’s Liberation Army.

Greg Allen, the director of the Wadhwani A.I. Center at the Center for Strategic and International Studies, a think tank, said Apple’s partnership ran counter to the bipartisan efforts in Washington to slow China’s A.I. development. Apple could be motivated to help Alibaba improve its artificial intelligence system because its A.I. could make iPhones in China more useful, valuable and easier to sell.

“The United States is in an A.I. race with China, and we just don’t want American companies helping Chinese companies run faster,” Mr. Allen said.

In addition to this scrutiny, Apple’s chief executive, Tim Cook, has faced new criticism from President Trump. During Mr. Trump’s trip across the Middle East this past week, he said he had “a little problem” with Mr. Cook because Apple was beginning to build products in India rather than the United States.

“We’re not interested in you building in India,” Mr. Trump said he had told Mr. Cook. “India can take care of themselves. They’re doing very well. We want you to build here.”

Last year, Apple revamped the iPhone with new A.I. abilities that it called Apple Intelligence. It said iPhone users would be able to use its A.I. product to summarize notifications and gain access to writing tools that could improve emails and other messages. It also revealed an improved Siri virtual assistant that could combine information on a phone, like a message about someone’s travel itinerary, with information from the web, like a flight arrival time.

Apple struck a partnership with OpenAI to support some of its A.I. abilities. OpenAI’s chatbot, ChatGPT, is currently answering questions when prompted on iPhones in the United States.

(The New York Times has sued OpenAI and its partner, Microsoft, accusing them of copyright infringement regarding news content related to A.I. systems. OpenAI and Microsoft have denied those claims.)

Because OpenAI doesn’t operate in Beijing, Apple needed to find a local partner to give iPhones in China the same performance as those in the United States. The company spoke with several Chinese tech companies before striking a deal with Alibaba. This year, it asked Chinese regulators to approve the A.I. features.

Congressional officials were alarmed that Apple had requested approval from Chinese regulators for the Alibaba partnership, two people familiar with their concerns said. Because A.I. is an emerging field, the committee worried that Apple might make concessions or sign an agreement that would make it subject to Chinese laws.

Apple hasn’t provided an update on when the A.I. features will become available on its iPhones in China. During calls with analysts this year, Mr. Cook said sales of iPhones had been better in markets where Apple Intelligence was available.

If the deal with Alibaba collapses, there is also a potential knock-on effect because Alibaba is a major e-commerce retailer that could sell and market iPhones, said Richard Kramer, a senior analyst at Arete Research, an investment advisory firm. He said that kind of partnership had the potential to boost the iPhone after Apple’s share of smartphone sales in China fell to 15 percent last year from 19 percent in 2023.

Without Alibaba, Chinese iPhone users could download A.I. apps, Mr. Kramer said. It would make for a more difficult experience than rivals might offer.

“People will still buy their phones, but it will make it harder,” he said.

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Alibaba (BABA) cloud unit slashes prices on AI models by up to 85%

admin — Wed, 01 Jan 2025 21:39:31 +0000

The World Artificial Intelligence Conference in Shanghai in July 2023.

Aly Song | Reuters

Alibaba is cutting prices on its large language models by up to 85%, the Chinese tech giant announced Tuesday.

The Hangzhou-based e-commerce firm’s cloud computing division, Alibaba Cloud, said in a WeChat post that it’s offering the price cuts on its visual language model, Qwen-VL, which is designed to perceive and understand both texts and images.

Shares of Alibaba didn’t move much on the announcement, closing 0.5% higher on the final trading day of the year in Hong Kong.

Nevertheless, the price cuts demonstrate how the race among China’s technology giants to win more business for their nascent artificial intelligence products is intensifying.

Major Chinese tech firms including Alibaba, Tencent, Baidu, JD.com, Huawei and TikTok parent company Bytedance have all launched their own large language models over the past 18 months, looking to capitalize on the hype around the technology.

It’s not the first time Alibaba has announced price cuts to incentivize businesses to use its AI products. In February, the company announced price reductions of as much as 55% on a wide range of core cloud products. More recently, in May, the company reduced prices on its Qwen AI model by as much as 97% in a bid to boost demand.

Large language models, or LLMs for short, are AI models that are trained on vast quantities of data to generate humanlike responses to user queries and prompts. They are the bedrock for today’s generative AI systems, like Microsoft-backed startup OpenAI’s popular AI chatbot, ChatGPT.

In Alibaba’s case, the company is focusing its LLM efforts on the enterprise segment rather than launching a consumer AI chatbot like OpenAI’s ChatGPT. In May, the company said its Qwen models have been deployed by over 90,000 enterprise users.

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