Globally, Alibaba Cloud Slashes Prices as AI Demand Grows

(CTN News) – China’s Alibaba Cloud announced on Monday that it will lower prices for products powered by its offshore data centers by as much as 59% to attract software developers who specialize in artificial intelligence.

According to the cloud service provider, products related to computing, storage, networking, databases, and big data will receive an average price reduction of 23%.

Alibaba Cloud Group Holdings (9988.HK), an e-commerce leader in China, has cut its cloud prices for the third time in twelve months. Alibaba announced an initiative similar to this in February aimed at domestic users.

Alibaba Cloud price cuts are part of its latest push to entice developers to build data-intensive AI models and applications on its cloud.

In addition to a surge in cloud computing demand in support of AI development across the globe, the company has also undergone complex internal restructuring. Eddie Wu, who is Alibaba’s chief executive officer, is leading a major overhaul of the company’s main businesses, including e-commerce.

Due to difficulties obtaining the high-end NVIDIA Corp. chips it needs to compete, Alibaba canceled a public listing in November, and has faced increasing competition from state-backed firms and Tencent Holdings Ltd.

Around 500 cloud product specifications were slashed by 23% by the Hangzhou-based company on Monday. Customers in 13 regions, including Japan, Indonesia, the United Arab Emirates, and Germany, are now eligible for those discounts.

After the announcement, the company’s shares in Hong Kong pared gains and traded about 0.5% higher.

Although Alibaba Cloud is China’s largest cloud service provider, it is relatively small in comparison to global leaders Amazon.com Inc. and Microsoft Corp. Recently, it has been hampered by a crackdown on Chinese internet companies.

US trade restrictions, which have hampered its expansion abroad as a result of market share loss in Alibaba Cloud China to state-backed rivals. The cloud division’s revenue, which surpassed $11 billion in the previous fiscal year, is expected to decline by 2% in the March quarter.

During an interview with Norwegian Bank last week, Chairman Joe Tsai acknowledged that US chip curbs pose a significant challenge for Chinese cloud providers.

Although stockpiled inventories can still be used to train large language models for the next 12 to 18 months, Tsai says limited access to NVIDIA’s best-in-class AI hardware will impact companies until there are domestic alternatives.

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