Alibaba bets on AI to fuel cloud growth as it expands globally to catch up with U.S. tech giants

Alibaba announced a global expansion of cloud computing on Thursday, with the head of the international business highlighting the company’s AI products as a growth driver.

The Chinese technology behemoth announced that it has expanded the availability zone of its cloud computing products to Mexico for the first time, and that it plans to establish new data centers in key countries such as Malaysia, Thailand, and South Korea over the next three years.

“We want to have… more efforts and investments for our international data centers,” said Selina Yuan, President of Alibaba Cloud’s international division, in an interview with CNBC on Wednesday.

The expansion follows a difficult year for Alibaba Cloud, which saw the business cancel a planned initial public offering and restructure its management.

Alibaba’s cloud division began worldwide expansion in 2015, with mixed outcomes to far. Synergy Research Group reports that Amazon, Microsoft, and Alphabet-owned Google control approximately 67% of the worldwide cloud market. Alibaba occupies little about 5% of that space.

According to Canalys data, Alibaba accounts for 39% of the market in China, making it one of Asia’s leading companies.

Previous CEO Daniel Zhang and current senior management recognized the cloud operation as a vital future business for Alibaba. However, growth has slowed dramatically in recent quarters. During an earnings call this month, Alibaba executives announced that the cloud segment would return to “double-digit growth” in the second half of the current fiscal year.

To rekindle that momentum, Alibaba is depending on its AI products and on acquiring additional customers. Alibaba has expanded its cooperation with French luxury house LVMH, who will now employ the Chinese tech giant’s AI tools in China.

In 2023, Alibaba launched Tongyi Qianwen, a large language model (LLM) – a sort of software educated on massive amounts of data that may power artificial intelligence applications. This month, the Chinese startup released a more advanced version of the model to compete with Chinese rivals such as Baidu and Tencent, as well as US tech titans like Microsoft, OpenAI, and Google.

Alibaba’s senior management, including CEO Eddie Wu, have emphasized the company’s potential in AI. Alibaba, like Microsoft and Google, provides artificial intelligence technologies through its cloud division..