Alibaba Cloud is seeing more AI workloads, accelerating revenue growth and benefiting from its Qwen open source family of models.
Although Alibaba's overall fourth quarter results didn't impress given tariffs and economic concerns for its retail businesses, Alibaba Cloud saw fourth quarter revenue growth of 18% due to AI workloads. Alibaba Cloud revenue in the fourth quarter was $4.15 billion with operating income of $333 million.
For fiscal 2025, Alibaba Cloud delivered revenue of $16.26 billion, up 11%, with operating income of $1.45 billion.
Speaking on Alibaba's fourth quarter earnings call, CEO Eddie Wu devoted a lot of time to the company's cloud unit. "Revenue from AI related products has maintained triple digit year-over-year growth for the seventh consecutive quarter," said Wu. "We expect AI to remain a key driver of accelerated revenue growth for Alibaba Cloud."
- Alibaba's Qwen picking up momentum
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Wu noted that there are uncertainties in the global AI supply chain, and that customer demand remains strong. AI workloads are a long-term play compared to short-term supply chain fluctuations.
According to Wu, Alibaba will do the following:
- Continue to invest in cloud and AI infrastructure.
- Advance foundational research and innovation in large language models via its Qwen models.
- Leverage open source distribution for Qwen. "By the end of April we had open sourced over 200 models under the Qwen family with more than 300 million downloads worldwide and over 100,000 derivative models, making it the world's largest open source model family," said Wu.
Wu also noted a few trends Alibaba Cloud is seeing. "Among large and mid-sized enterprises, AI applications are expanding from internal systems to more customer-facing use cases. At the same time, adoption of AI product is rapidly extending from large enterprises to a growing number of small and medium-sized businesses," said Wu.
In addition, workloads are broadening. Wu said Alibaba Cloud saw AI workloads in financial services, autonomous driving, internet and online services. Now AI workloads are broadening to more traditional industries, including farming and manufacturing.
"In terms of the trends that we're seeing across these different sectors with more and more companies adopting cloud based AI services, these are companies that had been using a traditional CPU based compute that are now turning to AI and AI compute," said Wu.
Alibaba Cloud's strategy is to leverage Qwen at the edge to drive workloads overall. He said:
"Our open source models have a lot of edge model applications and there are also applications that are suitable -- more suitable to be run on the cloud. There's a lot of different applications. They're not going to have much of an impact in terms of driving cloud business, but because those same customers are using the Qwen models, what that means is often they're also going to require additional usage of cloud based compute resources as well. I think that the edge models to a certain extent are complementary with our cloud based large parameter models. They work well together as a business model."
Constellation Research analyst Holger Mueller said Alibaba is in a good place with its cloud business:
"The four major cloud providers are dukjng it out in each market, but Alibaba has practically a monopoly for workloads in China and for Chinese companies - and doing well accordingly. When is that market saturated? It will be years before we know."
