Alibaba Cloud Increases Domain Auction Prices As AI Competition Heats Up: Report

Alibaba Group Holding’s BABA cloud computing unit, responsible for the online broadcasting of the 2024 Summer Olympics, announced a price hike on its domain name auction platform.

The company cited rising costs and intense competition for artificial intelligence (AI) services as reasons for the increase.

Starting August 1, bids for domain names on Alibaba Cloud will rise to 199 yuan for “.com” addresses and 99 yuan for other top-level domains, SCMP reports.

Also Read: Alibaba And Tencent Lap Up Meta’s AI Large Language Model

Previously, the starting bid for all domain names was 69 yuan, making this a significant increase of at least 43%.

In addition to the price increase, Alibaba Cloud has been adjusting its operations. The company plans to shut down data centers in India and Australia in July and September as part of an “infrastructure strategy update.”

Facing fierce competition from other Chinese tech giants, Alibaba Cloud has also been reducing costs.

According to market analytics firm Canalys, Alibaba Cloud held 37% of the market in the first quarter, followed by Huawei Technologies and Tencent Holdings on the mainland regarding customer spending.

Alibaba stock has lost over 23% in the last 12 months as it chases its AI ambitions amid a weak domestic economy further crippled by the US advanced semiconductor technology embargo.

Alibaba Stock Prediction For 2024

When buying a stock for a longer time horizon, it is important for investors to assess where they think the stock is headed in the future.

When mapping a stock's future trajectory, investors should consider factors including the future earnings expectations and expected performance against a benchmark.

Alibaba’s revenue has grown at an average rate of 17.45% annually over the past 5 years. The average 1-year price target from analysts is $110.67, representing an expected 40.82% upside in 2025.

While past performance is not a guarantee of future results, investors should also look at a stock's historical performance when compared to both a benchmark index and the company's peers. Shares of Alibaba have seen an annualized return of -25.29%, underperforming the S&P500 index by 32.81%. This compares to 1.79% growth in the overall Consumer Discretionary sector. Alibaba has a beta of 2.34.

Price Action: BABA shares traded lower by 0.27% at $78.41 at the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by Fooksou Lamimo via Wikimedia Commons