Alibaba Cloud has become the dominant cloud provider in China and nearing profitability, but future growth will largely revolve around moving up the services stack for artificial intelligence and analytics workloads.
The upshot from Alibaba Group’s investor sessions this week is the e-commerce giant is surging as shopping habits chang,e and it has a portfolio that touches commerce from many angles. Its Alibaba Cloud unit is what Amazon Web Services is to Amazon.
And like AWS, Alibaba is starting to see Alibaba Cloud as a future profit engine. Alibaba CFO Maggie Wu said that the cloud unit will turn profitable within fiscal 2021.
“The company expects cloud to become EBITA profitable in fiscal 2021, and is targeting AWS-like profitability long term,” said Oppenheimer analyst Jason Helfstein in a research note. “Moreover, ARPU is growing significantly faster than customers, implying customers are moving ‘up the stack.'”