According to the Associated Press (AP) The most notable growth was shown by Cloud Intelligence Group, which deals with cloud services and developments in the field of artificial intelligence. In January-March, its revenue increased 38% year-on-year to 41.6 billion yuan ($6.1 billion). In comparison, the two previous quarters saw growth of 36% and 34% respectively.
Despite the growth in the IT division, the company ended the quarter with an operating loss of 848 million yuan ($125 million). A year earlier, Alibaba Group recorded a profit of 28.5 billion yuan for the same period.
Investments in AI generate losses
One of the main reasons for the decline in profitability has been the rising costs of technology investments. Major IT companies around the world are actively investing in infrastructure to support the rapidly growing demand for artificial intelligence.
This week, Alibaba Group also announced the full integration of its flagship IT app Qwen with e-commerce platform Taobao. Users will be able to search for products, compare offers, place orders and track delivery through a normal dialog with artificial intelligence.
In addition, in March, the company introduced a new IT tool Wukong for corporate clients and raised prices for some of its IT services.
The “commercial” effect of AI
CEO Eddie Wu said Alibaba’s developments in artificial intelligence have “moved beyond the initial investment stage to large-scale commercialization.”
Alibaba Group’s U.S.-traded shares rose more than 7% following the release of its quarterly earnings.
Experts note that tech companies are now faced with the challenge of proving to investors the return on multi-billion dollar investments in AI. According to Jacob Cook, head of consulting firm WPIC Marketing + Technologies, Alibaba’s revenue growth from artificial intelligence is likely to continue to accelerate.
In March, Alibaba Group set a goal of surpassing the $100 billion mark in annual revenue from AI and cloud services over the next five years.
Analysts believe that the investment phase in China’s IT sector is far from over. Companies will gradually move from audience building to active monetization of IT products.
