Alibaba is establishing an ambitious objective: to exceed $100 billion in total revenue from its artificial intelligence and cloud businesses within the next five years. The company is deepening its involvement in the global AI race.

The firm is increasing investment in its cloud intelligence division, where external customer revenue grew by 35%, driven by AI-related products. Management noted that the AI business has achieved triple-digit growth for multiple consecutive quarters, reflecting strong demand from enterprise clients.

However, this expansion comes at a significant cost. While revenue saw a modest increase to 284.8 billion yuan, profitability declined sharply. Net profit fell by 66%, and adjusted EBITDA dropped by 57%, due to heavy investments in AI infrastructure, chips, and instant retail services.

Alibaba has shipped 470,000 AI chips from its T-Head business unit, many of which were supplied to external customers. The company has previously hinted at a potential spin-off of this segment but has not provided a specific timeline.

Management believes that current investments are essential for future leadership. Despite near-term pressure on profit margins, developing AI models, cloud services, and logistics platforms remains a top priority.

In the coming quarters, investors will monitor whether these investments can translate into sustainable growth and improved profitability.