Alibaba recently outlined a 5-year target to $100bn AI+Cloud revenue, however many investors are either not convinced or skeptical of future monetization.
Why Alibaba has $100bn target in the first place?
Besides the delayed AI boom in China with potential breakthrough in domestic AI chip production, what are the drivers?
1) Amazon CEO Andy Jassy outlined $600bn goal in 10 years recently
$100bn would be about 700bn rmb and matches the AWS “number”.
2) Within Alibaba, there could be potential internal politics consideration
E-commerce is still the most profitable core business; Jiang Fan leads the e-commerce efforts, spending billions in quick commerce etc.
Eddie Wu leads the AI+Cloud and is CEO of Alibaba. This is growing fast but still not as profitable.
These two people might be fighting for resources and territory within Alibaba.
AI+Cloud needs to be bold.
700bn rmb rev with 15% EBITA margin will be ~100bn rmb EBITA.
This could be matching Alibaba’s China e-commerce adj. EBITA in 2026, which dropped from ~200bn though, due to massive subsidy.
For Jiang Fan, quick commerce is a way to paint growth picture for overall china e-commerce business.
Otherwise, Eddie Wu might get more of Alibaba’s incremental spending, which then will almost ensure Wu’s rise and Jiang’s fall.
Jiang was also smart in not picking the fight with PDD, which is probably harder to win. The fight with Meituan is not easy, but if you have to pick one to fight with between PDD and Meituan, Meituan is the choice.
Tencent also has already made the choice – it sold Meituan stake and kept PDD stake.
Fighting with PDD is more defending vs. fighting with Meituan is winning new businesses. KPIs will look more exciting in the new business.