Alibaba Says If Artificial Intelligence Is Like Electricity, Then Its Cloud Computing Network Is The Power Grid: The Money Is In Powering AI, Not Selling It

Alibaba Group Holding Limited BABA executives say the real value in artificial intelligence will come from cloud infrastructure rather than the models themselves.

What Happened: On Thursday, during Alibaba's third-quarter earnings call, a company executive addressed the impact of DeepSeek's free large-language models and AI monetization strategies.

The executive argued that AI models, whether open-source or closed, are becoming increasingly similar in capability.

“If AI, artificial intelligence, is like electricity in this new era, then our cloud computing network is like the power grid that carries that electricity,” the executive said, highlighting that cloud infrastructure will be the backbone of AI operations.

See Also: Alibaba CFO Toby Xu Touts 5% Drop In Share Count Thanks To Aggressive Buybacks As Jack Ma-Founded Company Basks In Stellar Q3 Results

Rather than focusing on charging for AI models, Alibaba sees cloud computing as the primary driver of AI monetization.

“If you ask me what the monetization pathway is today, it’s definitely our cloud computing offerings that exist to host and to support the operation of these clouds,” the representative said.

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Why It Matters: The Jack Ma-co-founded e-commerce giant reported fiscal third-quarter revenue of $38.38 billion, an 8% year-over-year increase, surpassing the analyst consensus of $38.19 billion.

Revenue from Taobao and Tmall Group rose 5% to $18.64 billion, while Cloud Intelligence Group saw a 13% Y/Y growth to $4.35 billion.

Alibaba’s capital expenditure reached $31 billion this quarter, nearly doubling from the previous quarter. The company stated that over the next three years, it will invest more than it did in the past decade combined.

Price Action: At the time of writing, Alibaba shares are up 0.82% to $137.09 in after-hours trading, following an 8.09% jump to $135.97 during Thursday's regular session, according to Benzinga Pro.

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