Alibaba’s cloud sales soar amid quarterly revenues miss

Alibaba’s latest quarterly results showed a mixed picture: revenue for the June quarter rose, driven by faster growth in its cloud computing arm and continued progress in e-commerce, but other business segments limited overall performance.

Primarily, a bright spot in the result was the strong growth of its Cloud Intelligence Group.

The revenue rose to 2% once in a year, while the company’s net income was up by 78%.

Alibaba’s increase in profit was due to two main factors. The initial gain from its equity investments and the sale of its e-commerce company Trendyol.

Alibaba cloud accelerates as AI demand surges

Alibaba said revenue at its cloud division showed strong performance, with total of 33.4 billion yuan, a 26% year-on-year increase.

This marks an acceleration from the previous quarter’s 18% growth rate.

Alibaba’s cloud unit rate is seen as key to the company's monetization of artificial intelligence, much like Microsoft or Google.

Alibaba CEO Eddie Wu said in a statement, “Driven by robust AI demand, Cloud Intelligence Group experienced accelerated revenue growth, and AI related product revenue is now a significant portion of revenue from external customers.”

Investors are paying close attention to Alibaba’s investments in artificial intelligence, where it has solidified its position and has become a significant player.

The company has aggressively rolled out various AI models and is selling services through its cloud computing division.

Meanwhile, Alibaba has a major focus on open-source AI which means its models can be used for free and built on by AI developers.

The New York listed shares of Alibaba have seen a significant increase of over 40% this year.

This impressive stock performance is particularly accredited at its core China e-commerce business and acceleration of its cloud computing division.

The company, which lost momentum in July due to the uncertainty in the Chinese company, launched initiatives in Beijing to boost consumption this year.