Key Points

Kaifu Zhang, Vice President of Alibaba, stated on Thursday that the company has achieved cost recovery in its AI investments within the e-commerce sector. Zhang noted that preliminary tests indicate stable results from AI, with a 12% improvement in advertising return on investment.

Despite market concerns about excessive investments in AI technology yielding minimal results, the Chinese tech giant remains confident that AI will generate returns. Alibaba has pledged to invest over $50 billion in AI over the next three years.

The company has committed to investing over 500 billion yuan (approximately $53 billion) in AI over the next three years. Despite widespread market concerns about high expenditures on AI technologies with few tangible outcomes, Alibaba maintains strong confidence in AI’s potential for returns. Earlier this year, the company pledged to invest 380 billion yuan in AI; in September, Alibaba announced it would further increase investments in AI and cloud infrastructure.

Kaifu Zhang is primarily responsible for AI applications within Alibaba's e-commerce business. Earlier in the day, he introduced a series of AI tools the company has launched, focusing on aspects such as optimizing personalized search results and enhancing virtual fitting accuracy.

This disclosure coincided with the commencement of Alibaba's "Double Eleven" pre-sale event. "Double Eleven" is China's largest annual shopping event, akin to Black Friday in the United States. Zhang indicated that preliminary tests show stable and continuous performance from AI technology, including a 12% increase in advertising return on investment.

"Seeing a double-digit change in such tests is very rare," he stated in Chinese (translated by American consumers' news and business channels). Zhang predicted that, thanks to the integration of AI technology, Alibaba's gross merchandise volume (GMV) during this year’s "Double Eleven" shopping period, centered around November 11, will experience a "significant" positive impact.

Alibaba's e-commerce business in China remains the primary revenue source for the tech giant. In the quarter ending June 30, this segment's revenue grew by 10% year-over-year, reaching approximately $19.53 billion.

While consumer spending in China has been sluggish over the past few years, research firm Syntun estimated that during last year's "Double Eleven," sales on Alibaba's Tmall, JD.com, and Pinduoduo platforms increased by 20.1% year-over-year, totaling 1.11 trillion yuan.

At the end of August, Alibaba highlighted AI and consumer spending as two "historic opportunities" and indicated that the company would need to make "historic scale" investments. "Our top priority right now is to advance these investments," stated Alibaba CFO Toby Xu at the time. "Therefore, we may relatively lower our emphasis on profit margins at this stage, but this does not mean we are neglecting profit margins."