Alibaba's AI Business Soars

What happened

Alibaba Group reported a 53% net profit decline to RMB20.99 billion in its fiscal second quarter, primarily due to intense food delivery competition. Concurrently, the Cloud Intelligence Group's revenue increased 34% to RMB39.8 billion, driven by AI product demand, which has seen triple-digit growth for nine consecutive quarters. Alibaba invested approximately RMB120 billion in AI technologies and infrastructure over the past four quarters and launched the Qwen AI app, achieving 10 million downloads within a week, with plans to integrate it into a comprehensive AI agent across consumer services.

Why it matters

Alibaba's substantial capital expenditure on AI infrastructure and rapid deployment of consumer AI applications introduce new operational dependencies and data processing requirements. This increases the due diligence burden for data governance and privacy teams concerning the handling of user data generated by the Qwen AI app and its planned integration across consumer services. It also places a higher operational load on IT infrastructure teams to manage the expanded AI compute and storage resources, tightening dependencies on AI platform stability and performance.