Chinese technology giant Alibaba Group reported a sharp increase in cloud revenue during the March 2026 quarter, driven by rapidly growing demand for artificial intelligence services and enterprise AI infrastructure. The company’s Cloud Intelligence Group recorded nearly 40% year-on-year growth in external revenue, marking one of its strongest cloud performances in recent years as businesses continue investing heavily in AI adoption.
According to company disclosures, revenue from Alibaba’s Cloud Intelligence Group rose to approximately 41.6 billion yuan ($6.1 billion) during the quarter. The growth was fueled largely by rising enterprise demand for AI products, public cloud services, and large language model applications. AI-related products now contribute nearly 30% of Alibaba Cloud’s external revenue, with the company expecting that figure to exceed 50% within the next year.
Alibaba CEO Eddie Wu stated that the company has moved beyond the initial AI investment phase and entered large-scale commercialization of its artificial intelligence business. The company has been aggressively expanding its AI ecosystem through products such as its Qwen large language model, enterprise AI services, and agentic AI tools aimed at businesses and developers. Earlier this year, Alibaba also integrated its Qwen AI assistant with Taobao, allowing users to browse and shop through conversational AI interactions.
The strong cloud growth comes despite significant pressure on Alibaba’s profitability. Reports indicate the company’s adjusted EBITA fell sharply during the quarter as it continued investing heavily in AI infrastructure, cloud data centers, and e-commerce expansion. Alibaba has pledged to invest at least 380 billion yuan over the next three years into cloud computing and artificial intelligence infrastructure, underscoring the scale of competition in the global AI race.
Industry analysts believe Alibaba is positioning itself as one of the leading AI infrastructure providers in Asia as enterprises increasingly adopt generative AI technologies. The company’s cloud business has become a central pillar of its long-term strategy, gradually reducing dependence on traditional e-commerce revenue streams. Analysts also expect AI-related revenue growth to continue accelerating as businesses shift from experimentation toward large-scale deployment of AI tools and automation systems.
The broader Chinese technology sector is witnessing intense competition around AI and cloud services, with companies such as Tencent, Baidu, and Huawei also ramping up investments in AI infrastructure and enterprise platforms. Rising global demand for AI computing power, cloud storage, and intelligent enterprise applications has transformed cloud businesses into one of the fastest-growing segments within the technology industry.
Following the earnings announcement, Alibaba’s U.S.-listed shares climbed significantly as investors responded positively to the company’s accelerating AI and cloud momentum despite weaker profitability metrics. Market experts believe the company’s continued investment in AI infrastructure could strengthen its position in the global cloud computing and artificial intelligence market over the long term.
