China's Alibaba Group saw its cloud computing business revenue grow by seven percent during Q3 2024. According to Alibaba CFO Toby Xu, AI-related product revenue has achieved triple-digit year-over-year (YoY) growth for the fifth consecutive quarter, which "triggers" more demand for the company's public cloud solutions.
The cloud segment's adjusted EBITA increased by 89 percent to RMB 2.7 billion ($372.75m), while the adjusted EBITA margin increased four percentage points to 9 percent YoY. CFO Xu puts this down to a "shift in product mix toward high-margin public cloud products, including AI-related products and improving operating efficiency, partly offset by the increasing investments in customer growth and technology."
"By lowering the API token price, we will attract lots of new users to come and use the models to deploy their applications on our cloud, and that will result in an increase in their use of our compute power, storage, database and other products. So, you could really think of the reduction in token price as an investment in user acquisition and user growth because we have a full technology stack," Wu said.
