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Strategic investments in AI infrastructure
To compete in the market, Alibaba is investing heavily in AI.
Players in China’s ‘quick commerce’ sector are spending billions on their logistics infrastructure to reduce delivery times and increase market share. Earlier this year, Alibaba noted a planned expense of 380 billion yuan (US$53.7bn) over three years for AI and cloud infrastructure.
This figure may increase to meet the needs of its customers and address potential supply chain issues. According to Eddie Wu, Alibaba Group CEO, Alibaba will continue to invest in this area.
“We will be investing in AI infrastructure aggressively; the 380 billion yuan investment we previously mentioned might be on the small side given the customer demand,” says Eddie.
This heavy investment contributes to a 53% fall in Alibaba’s net profit to 20.61 billion yuan (US$2.9bn), but some analysts believe these expenditures could evolve into long-term advantages for the retailer.