Alibaba Is Transforming: Artificial Intelligence and Cloud Services as Engines of Future Growth

Alibaba Group published its fiscal year 2025 results in a letter to shareholders signed by Chairman Joe Tsai and Chief Executive Officer Eddie Wu. The Chinese technology giant reports solid progress in its key "user first, AI-driven" strategy, which has become the foundation of its long-term growth.

Two Key Areas: E-commerce and "AI + Cloud"

During the year, the company's management focused on two main business areas—e-commerce and "AI + Cloud"—which it describes as the "twin engines" driving the company's long-term growth. With artificial intelligence at the center of its future, Alibaba significantly increased investments in cloud computing and AI infrastructure to accelerate innovation and support the industrial adoption of artificial intelligence technologies.

The company also took disciplined steps to streamline its portfolio, including the sale of non-core assets such as Sun Art and Intime. At the same time, it steadily improved operational efficiency across its internet platforms. For example, Hujing Digital Media and Entertainment Group and Amap achieved a profitable quarter during fiscal year 2025.

The "User First" Strategy in Numbers

With more than 1.1 billion internet users, China represents the world's largest online retail market, where e-commerce accounts for nearly 27% of total retail consumption. In Chinese commerce, Taobao and Tmall Group remained focused on user growth and improving the user experience. As China's leading e-commerce platform, the company also enhanced the operating environment for merchants, supporting those that offer high-quality products and services.

In international commerce, Alibaba International Digital Commerce Group (AIDC) achieved tremendous revenue growth through its cross-border e-commerce businesses. The company strengthened its local offerings in key markets and diversified its portfolio to meet the needs of consumers across regions worldwide.

The Artificial Intelligence Revolution

The second strategic focus, "AI-driven," reflects the company's view of artificial intelligence as both a key driver of business growth and a transformative force for the future. Over the next decade, AI is expected to reshape every industry. Alibaba is investing aggressively in AI infrastructure and critical innovations to enhance its global competitiveness.

Alibaba Cloud, the company's key AI-driven business, benefited from growing demand for AI. Public cloud revenue growth accelerated, while revenue from AI-related products recorded triple-digit growth for seven consecutive quarters, driving total revenue to double-digit growth for the fiscal year.

Qwen3 Model and Open-Source Strategy

In the field of foundation models, the company is expanding the boundaries of model capabilities while maintaining its commitment to open-source development. In April 2025, it launched its new-generation Qwen3 model, which ranked among the world's best models according to multiple authoritative benchmarks.

As of April 2025, more than 200 models from the Qwen family had been released as open source, generating more than 300 million global downloads and over 100,000 derivative models. This made Qwen the world's largest open-source model family. The company believes its open-source strategy will empower developers worldwide to jointly advance human intelligence and contribute to the long-term goal of achieving artificial general intelligence (AGI).

Financial Results and Shareholder Returns

In fiscal year 2025, Alibaba generated strong cash flow from its core businesses. The company improved operational efficiency across multiple platform businesses and strengthened the foundations of previously loss-making businesses, many of which are now approaching profitability. Disciplined capital allocation efforts helped unlock value for shareholders, including significant capital recovery from the sale of non-core assets such as Sun Art and Intime.

To return value to shareholders, the company distributed $4 billion in annual and special dividends for fiscal year 2024 and announced a total of $4.6 billion in dividends for fiscal year 2025. In addition, it repurchased $11.9 billion worth of its own shares, resulting in a 5.1% net reduction in the total number of shares outstanding and an increase in earnings per share.

Investing in the Future

The rapid development of artificial intelligence is bringing sweeping changes across industries and, with them, significant growth opportunities for Alibaba. Over the next decade, AI will be the primary engine of incremental value and transformation. For Alibaba, this means developing world-class AI models, pushing the boundaries of model capabilities, and building globally competitive AI-powered cloud infrastructure.

To realize this vision, the company is increasing investments in three key areas: AI and cloud infrastructure, foundation AI models and native applications, and the AI transformation of existing businesses. In fiscal year 2025, the company announced that its planned investments in cloud and AI infrastructure over the next three years would exceed the total investments made over the past decade.

The company's management emphasizes that Alibaba is strategically well positioned in this new era. It is a key player in China's cloud computing market and a leading cloud services provider in Asia-Pacific. Alibaba Cloud is expanding its global cloud computing infrastructure and increasing the international deployment of AI-related products to support the globalization of Chinese businesses.

As Joe Tsai and Eddie Wu conclude in their letter: "Creation, not preservation, is in Alibaba's DNA. Today, Alibaba is entering a new chapter in the AI era with the heart of an entrepreneur and the ambition to lead."