Alibaba Group, the Chinese tech giant, reported a 34% surge in revenue from its cloud computing division in the July-September quarter, driven by the rapid adoption of artificial intelligence (AI) technologies. Despite this impressive growth, the company’s overall revenue for the quarter rose by a modest 5% year-on-year to 247.8 billion yuan ($35 billion), while net profit plummeted by 52%. The decline in profitability was attributed to intense price competition in China’s e-commerce and food delivery sectors, which impacted short-term earnings. Competitor JD.com also faced a similar challenge, reporting a 55% drop in net profit during the same period. Alibaba, which began as an e-commerce platform, has increasingly shifted its focus to cloud computing and AI. Earlier this year, the company committed to investing at least 380 billion yuan ($53 billion) over three years to bolster its AI and cloud infrastructure. CEO Eddie Wu highlighted that the group’s substantial investments in AI have been instrumental in driving revenue growth. The 34% increase in cloud revenue outpaced the 26% growth recorded in the previous quarter. Alibaba emphasized that demand for AI is accelerating, and it may exceed its planned investment of 380 billion yuan to meet surging market needs. The company also announced that its upgraded AI chatbot, Qwen, which competes with OpenAI’s ChatGPT, garnered 10 million downloads within a week of its public launch. Alibaba’s Hong Kong shares rose by 2% on Tuesday, and its New York Stock Exchange shares climbed 2.4% before the opening bell. Year-to-date, the company’s shares have surged over 90%, reflecting investor optimism about its AI advancements. Meanwhile, other Chinese tech giants have reported mixed results. Tencent, a rival in AI, posted a 15% year-on-year revenue increase, while Baidu saw a 7% decline. Despite growing concerns among investors about a potential AI bubble, strong earnings from Nvidia last week have somewhat alleviated these worries.