Alibaba’s Transformation Beyond E-Commerce

When people think of Alibaba, the first image that comes to mind is usually its e-commerce empire—TaoBao, Tmall, and a sprawling online retail network. But today, the Hangzhou-based company is pushing hard into new territory, proving it doesn’t want to remain “just” China’s version of Amazon.

Alibaba’s stock has soared nearly 60% this year, not because of online shopping, but because of its fast-growing cloud computing and artificial intelligence ventures. This shift echoes the playbooks of U.S. tech heavyweights like Amazon and Nvidia, showing how Alibaba is positioning itself to lead China’s digital economy on multiple fronts.

Cloud Computing: The Growth Engine

Cloud technology has become the centerpiece of Alibaba’s evolution. In its latest quarterly earnings, the company reported 26% year-over-year sales growth in its cloud computing unit. Even more impressive is the surge in its AI-related products, which maintained triple-digit annual growth.

Alibaba’s in-house Qwen AI model consistently ranks among the world’s strongest language models, attracting clients across industries. Whether businesses use Alibaba’s own AI tools or simply rent its cloud infrastructure to run third-party models, the company profits either way. Analysts now see Alibaba as the clear cloud leader within China, with an ecosystem strong enough to rival global competitors.

Stepping Into Chip Design

Alibaba isn’t stopping at cloud services. According to recent reports, the company is also making strides in designing AI-optimized chips. While it has developed chips before, the new generation is expected to handle a much wider range of AI inference tasks, making them more practical for broad adoption.

Though these chips lag behind the cutting-edge hardware from Nvidia, they could fill an important gap. With the U.S. restricting exports of advanced chips to China, Alibaba’s designs may become essential alternatives for domestic firms. Unlike Huawei’s more closed systems, Alibaba’s chips are reportedly more compatible with programs initially built for Nvidia, giving developers greater flexibility.

This move places Alibaba in the same conversation as global semiconductor players—a bold step for a company once best known for online shopping.

E-Commerce Still Matters—But With Challenges

While AI and cloud dominate the headlines, Alibaba’s core business still generates just under 60% of its total revenue. In the last quarter, e-commerce sales grew 10% year-over-year, reaching 19.6 billion yuan.

However, not every segment is thriving. Food delivery, operating under TaoBao Instant Commerce, continues to struggle. Facing fierce competition from rivals like Meituan and JD.com, the division remains unprofitable as it battles for users with aggressive pricing strategies.

This highlights the contrast in Alibaba’s operations: its AI and cloud bets are fueling investor optimism, while some traditional commerce units remain in a tough fight.