Alibaba is projecting a major leap in artificial intelligence earnings, saying revenue from its AI models and applications could hit 30 billion yuan (about $4.4 billion) by the end of 2026 as the Chinese tech giant accelerates its push into the fast-growing sector.
The company disclosed in a filing in Hong Kong that its annualised recurring revenue from AI services is expected to surge over the next year, driven by rising demand for enterprise AI tools, cloud computing services and consumer-facing applications. The target underscores Alibaba’s growing ambition to position itself as one of China’s dominant players in generative AI.
Alibaba said it generated 8.97 billion yuan (about $1.32 billion) in quarterly revenue from AI-related products, marking the first time it publicly separated the figure. The company added that the segment has now recorded triple-digit growth for 11 consecutive quarters, making AI one of its fastest-growing businesses.
Chief Executive Officer Eddie Wu said AI products could contribute more than half of Alibaba’s cloud revenue within the next year, reflecting the company’s rapid shift from traditional e-commerce into cloud infrastructure and machine-learning services.
He noted that the company’s flagship AI assistant, Qwen, has been integrated into its shopping ecosystem, allowing users to search for products, compare options and complete purchases through natural language interactions.
The AI expansion, however, is coming at a significant cost. Alibaba said capital spending is likely to exceed its previously announced 380 billion yuan ($56 billion) investment plan as it builds additional AI-focused data centres and computing infrastructure. The company sees the spending as necessary to stay competitive in China’s intensifying technology race.
Despite strong AI growth, the aggressive investment has sharply weighed on profits. Alibaba reported that adjusted earnings before interest, taxes and amortisation fell 84 per cent year-on-year in the latest quarter, while free cash flow turned negative at $2.51 billion.
The company also posted an operating loss of 848 million yuan, a sharp reversal from the 28.5 billion yuan operating profit it recorded in the same period a year earlier.
Analysts say Alibaba’s strategy mirrors a broader trend among Chinese tech giants that are pouring billions into AI despite near-term financial pressure. The company’s core e-commerce division still accounts for a large share of overall revenue, but executives increasingly view AI as the next major growth engine capable of reshaping both online shopping and cloud services.
Alibaba’s U.S.-listed shares rose as much as six per cent in early trading after the announcement, as investors appeared encouraged by the company’s long-term AI outlook despite the short-term hit to profitability.
