Alibaba Cloud plans to use fewer Western chips, to boost its already huge AI margins
Cloudy AI is Chinese giant’s ‘most certain’ path to growth as e-commerce slows
Alibaba Cloud aims to increase its margins in the AI domain by reducing reliance on Western chips. CFO Toby Xu revealed that the company anticipates recouping investment in new hardware within just 2.5 years, thanks to soaring AI service margins. CEO Eddie Wu confirmed that machines purchased in 2018 and 2020, utilizing Nvidia V100 and A100 accelerators, are still operating near full capacity.
Alibaba envisions a future where self-developed chips dominate its data centers, thereby enhancing product competitiveness and gross profit margins. Over 650 external clients have already adopted Alibaba's proprietary chips, though AWS boasts a staggering 120,000 users of its Graviton chips. Alibaba plans to maintain spending on AI infrastructure, driven by the technology's status as its "most certain growth engine."
Despite e-commerce revenues growing by only 4%, Alibaba Cloud's AI services have outperformed, with a remarkable quarterly revenue of $7.14 billion. However, Alibaba's international footprint faces challenges as several Western nations have imposed restrictions on its usage due to geopolitical concerns. Nevertheless, Alibaba's accelerated delivery time for hyperscale AI data centers, at just 100 days, positions the company as a global leader, promising swift infrastructure expansion to meet escalating demand.
Written by urgent.news from The Register Science's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
