Alibaba says AI spending for e-commerce Taobao Tmall is breaking even

Alibaba, the Chinese e-commerce giant, has announced a significant investment of over $50 billion in artificial intelligence over the next three years. This move comes as part of the company’s strategy to enhance its e-commerce business with cutting-edge technology.

Vice President Kaifu Zhang revealed that Alibaba is already seeing positive returns on its AI investment in the e-commerce sector. Despite concerns in the market about the effectiveness of AI investments, Alibaba remains confident in the potential of this technology. In February, the company committed to spending 380 billion yuan on AI and cloud infrastructure over the next three years.

Zhang highlighted the various AI tools that Alibaba has deployed, such as personalized search results and improved virtual clothing try-ons. These tools have already shown promising results, with a 12% increase in returns on advertising spend. Zhang expressed optimism about the impact of AI integration on Alibaba’s gross merchandise volume during the upcoming Singles Day shopping event on November 11.

Alibaba’s e-commerce business continues to be its primary revenue source, with a 10% year-on-year growth in the last quarter. Despite challenges in the Chinese consumer market, Alibaba, along with competitors like JD.com and PDD, saw significant growth during last year’s Singles Day event.

During an earnings call in late August, Alibaba emphasized the importance of AI and consumption as key opportunities for the company. CFO Toby Xu stressed the need for significant investments in these areas, even if it means prioritizing investments over profit margins in the short term.

As Alibaba continues to lead the e-commerce market in China, its focus on AI technology and innovation will be crucial in sustaining its growth and competitiveness. The company’s commitment to investing in AI underscores its dedication to staying at the forefront of technological advancements in the industry.