Chip export restrictions bring uncertainty, Alibaba no longer promotes the complete spin-off of Alibaba Cloud

On November 16, Alibaba Group announced its second quarter financial report for fiscal year 2024, which disclosed that due to various uncertainties, it will no longer promote the complete spin-off of Cloud Intelligence Group. At the same time, Alibaba will resolutely increase its continuous strategic investment in Alibaba Cloud to ensure that Alibaba Cloud focuses on the "AI + cloud computing" development strategy and creates cloud computing services with leading technology in the AI ​​era.

Alibaba's financial report shows that "the United States' recent expansion of restrictions on the export of advanced computing chips has brought uncertainty to the prospects of Cloud Intelligence Group. We believe that the complete spin-off of Cloud Intelligence Group may not increase shareholder value as originally envisioned, so we decided We will no longer promote the complete spin-off of Cloud Intelligence Group, but will focus on establishing a sustainable growth model for Cloud Intelligence Group in the face of an uncertain environment.”

Alibaba said that in the era of AI, Alibaba Cloud needs long-term strategic investment more than ever. Alibaba will resolutely increase its investment in Alibaba Cloud, allowing Alibaba Cloud to focus on the "AI + cloud computing" development strategy and minimize the adverse impact of uncertainties on future development.

In this regard, some investors asked whether Alibaba Cloud's listing plan would be suspended or permanently cancelled. After the market situation changes, whether Alibaba Cloud's spin-off will be reconsidered.

Tsai Chongxin, chairman of the board of directors of Alibaba Group, did not give a clear answer. Tsai Chongxin said that he wanted to completely spin off Alibaba Cloud at that time because he wanted to show the true value of the business through so-called financial engineering. At that time, Alibaba Cloud was in a general environment where the entire operation was predictable and could be transparently disclosed to the business. The investor demonstrated the growth trend of the business, "Now the general environment has changed. Now we no longer use financial engineering, but through further investment to show the value of the cloud business. In the future, we will seek to increase its growth, including revenue and profits." "

The financial report shows that in the new quarter, Alibaba Cloud's revenue increased by 2% year-on-year to 27.648 billion yuan, and its adjusted EBITA profit increased significantly from 387 million yuan in the previous quarter to 1.409 billion yuan, a month-on-month increase of 264%. By proactively reducing project orders, Alibaba Cloud is improving the quality of revenue and optimizing profitability.

Alibaba said in its financial report: We continue to improve the quality of revenue by reducing project contract revenue with lower profit margins. At the same time, revenue from public cloud products and services increased this quarter, driving the optimization of profitability.

At the just-concluded Yunqi Conference, Alibaba Cloud comprehensively upgraded its AI infrastructure, released Bailian, a one-stop artificial intelligence application development platform, launched version 2.0 of the large model Tongyi Qianwen, and also released eight vertical industry models and Use cases such as code generation and customer support. Facing the AI ​​era, Alibaba Cloud will continue to promote system innovation from underlying computing power to AI platform to model services, upgrade the cloud computing system, and create the most open cloud in the AI ​​era.

At the same time, Alibaba Cloud builds and operates China's largest AI open source community. The Moda community has gathered more than 2.8 million AI developers and more than 2,300 high-quality AI models. The number of downloads of AI models has exceeded 100 million. At the same time, Alibaba Cloud also provides an open source version of the Tongyi large model on the Moda community. It has open sourced the 7 billion parameter and 14 billion parameter versions, and will also open source the 72 billion parameter version of the Tongyi large model in the future.

During the quarter, Alibaba Cloud also supported the first "Asian Games on the Cloud", achieving 100% cloud migration of the core systems of the Asian Games. The Hangzhou Asian Games is the first time in the history of the Asian Games that cloud computing has replaced traditional IT, fully supporting the organization and operation of the Asian Games, and leaving China's technical standards for the Asian Games.