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Alibaba Boosts Cloud Growth with AI Expansion

Alibaba's bold expansion in global cloud computing, coupling the announcement towards leveraging AI products
May 23, 2024

In a significant move to bolster its global presence, Alibaba announced on Thursday the expansion of its cloud computing services to new markets. This includes the debut of an availability zone in Mexico and the construction of data centers in Malaysia, Thailand, and South Korea over the next three years.

Selina Yuan, President of Alibaba Cloud’s international division, emphasized the company's commitment to international growth during an interview. "We are making significant investments in our international data centers to support our expanding cloud services," Yuan said.

This expansion comes at a crucial time for Alibaba Cloud, which has faced recent challenges, including the cancellation of a planned IPO and a major management overhaul. Since its international launch in 2015, Alibaba Cloud has struggled to compete with dominant players like Amazon, Microsoft, and Google, which together hold around 67% of the global cloud market. Despite this, Alibaba maintains a strong presence in China, capturing 39% of the market, according to Canalys.

The cloud unit has been earmarked as a pivotal area for growth by Alibaba’s leadership. However, growth has slowed in recent quarters. During a recent earnings call, executives projected a return to double-digit growth in the latter half of the fiscal year, driven by advancements in AI and a growing customer base.

A key component of this strategy is Alibaba’s AI offerings. The company recently strengthened its partnership with French luxury brand LVMH, integrating Alibaba's AI tools into LVMH’s operations in China. Alibaba also launched an advanced version of its large language model, Tongyi Qianwen, in a bid to stay competitive with both domestic rivals like Baidu and Tencent and international giants like Microsoft, OpenAI, and Google.

CEO Eddie Wu and other senior executives have been vocal about the company's AI potential. “AI represents the future, and cloud computing is integral to supporting AI and large language models,” Yuan explained. “We have a clear strategy and robust cloud infrastructure, which positions us well to drive business growth for our customers and partners.”

As Alibaba Cloud navigates the competitive landscape, its focus on AI and international expansion highlights its ambition to secure a larger share of the global cloud market and reinforce its leadership in the tech industry.

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