Alibaba expects AI product revenue to reach $10B next quarter

Alibaba’s AI business is growing at a pace that makes its already-impressive cloud division look like a warm-up act. The company’s annualized AI-related product revenue has hit roughly RMB 35.8 billion, or about $5.2B, and management expects that number to keep climbing fast as AI products take over a larger share of its cloud portfolio. The Cloud Intelligence Group posted 45% year-over-year revenue growth in the June quarter, fueled by AI-related products that have now delivered triple-digit year-over-year growth for twelve consecutive quarters. The numbers behind Alibaba’s AI push Annual recurring revenue for AI model and application services is projected to surpass RMB 10 billion (roughly $1.4B) in the June quarter. By year-end, that ARR figure is expected to triple to RMB 30 billion, or approximately $4.3B. AI-related products currently account for about 30% of external cloud revenue. Management believes that share will cross the 50% threshold within roughly one year. Capital expenditures surged 75% in one quarter to approximately RMB 67.7 billion, or about $10B, with the vast majority going toward AI infrastructure and compute capacity. CEO Eddie Wu’s strategic pivot The archi...