Alibaba quarterly profit drops 75% as AI investment spending grows
Summary
Alibaba’s profit dropped by 75% in the latest quarter because it spent a lot on building artificial intelligence (AI) infrastructure. Despite lower profits, the company’s revenue grew, especially from AI-related cloud services, which increased by 45%.Key Facts
- Alibaba’s quarterly profit fell from 43.1 billion yuan ($6.4 billion) to 10.5 billion yuan ($1.6 billion).
- Total revenue rose 9% to nearly 269 billion yuan (about $40 billion).
- Revenue from AI cloud and computing services increased 45% to 48.4 billion yuan ($7.2 billion).
- Capital spending grew 75% to 67.7 billion yuan (around $10 billion), mainly for AI infrastructure.
- Higher costs came from buying more computer chips and expanding computing power for AI services.
- Alibaba plans to invest about 380 billion yuan ($56 billion) over three years in cloud computing and AI.
- The company aims to earn over $100 billion annually from AI and cloud services in five years.
- Alibaba’s CEO said they expect AI and cloud revenue to grow more and improve profits soon.
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