Alibaba’s Cloud Intelligence Group posted revenue of $4.66 billion in fiscal Q1, compared with $4.15 billion in the same quarter last year
In sum – what to know:
Cloud revenue surged 26% – Alibaba Cloud posted $4.66B in Q1 2026, outpacing the company’s overall 2% growth, with AI-related revenue sustaining triple-digit expansion.
$53B capex commitment – Alibaba spent $5.4B last quarter on cloud and AI, despite supply chain risks tied to chip restrictions, and plans $53B over three years.
SAP partnership expands – A new deal positions Alibaba Cloud as SAP’s global partner, deploying Qwen AI models to support enterprise AI transformation services worldwide.
Alibaba Group’s cloud computing arm reported a 26% year-on-year revenue increase in its latest quarterly results, underscoring the unit’s role as the Chinese company’s main growth driver.
In its Q1 2026 earnings, Alibaba’s Cloud Intelligence Group posted revenue of $4.66 billion, compared with $4.15 billion in the same quarter last year. The division highlighted that AI-related revenues maintained triple-digit growth for the eighth consecutive quarter, now accounting for more than 20% of external customer revenue.
Alibaba’s chairman, Eddie Wu, said this momentum reflects strong enterprise adoption of Alibaba’s AI models, including Qwen. Among key wins this quarter was a partnership with SAP, under which Alibaba Cloud will serve as SAP’s global cloud computing partner. SAP will use Alibaba’s Qwen models to deliver AI transformation services to enterprises.
The earnings showed the sharp contrast between the cloud unit’s performance and that of Alibaba’s broader business. Alibaba revenue rose only 2% year-on-year in fiscal Q1, to $34.57 billion.
Alibaba has also been accelerating infrastructure investment. The company reaffirmed its plan to spend $53 billion on cloud and AI over the next three years, with around $5.4 billion deployed in the past quarter alone. Wu noted, however, that AI chip supply chain restrictions could create fluctuations in capex spending, though Alibaba is working with multiple partners to mitigate risks.
Industry comparisons put Alibaba’s cloud growth on par with US hyperscalers: Google Cloud reported 32% growth in its last quarter, Microsoft 26%, and AWS 17.5%.
Beyond China, Alibaba Cloud continues to expand internationally, opening new data centers in Malaysia and South Korea.
Alibaba Group has developed a new artificial intelligence chip designed to handle a wider range of inference tasks, according to a recent Wall Street Journal report.
The chip, currently undergoing testing, is being manufactured in China, a shift from an earlier generation of Alibaba’s AI processors that were fabricated by Taiwan Semiconductor Manufacturing Company (TSMC), according to the report.
The development comes amid efforts by Chinese technology firms to reduce reliance on foreign AI chip suppliers.
Chinese authorities have discouraged domestic companies from deploying the Nvidia H20 chip, particularly in government and security-related projects. Chinese authorities also reportedly instructed large firms such as Alibaba, ByteDance and Tencent to pause H20 purchases while a national security review is underway.
China is requiring its data centers to adopt more domestically produced chips, underscoring Beijing’s intention to reduce dependence on foreign semiconductors, according to a report by the South China Morning Post.
State-owned computing hubs in China have been instructed to ensure that over half of their chips come from domestic manufacturers.
