Alibaba Cloud AI development accelerates: increased investment, prosperous applications, open ecosystem

Author: Bao Yilong

Source: Hard AI

At the 2025 AI Developers Conference, Alibaba Cloud emphasized accelerating the development of AI applications through upgrading foundational models, inference processing, and development tools. The Citigroup research team believes that Alibaba's comprehensive layout in the AI field will drive its continued leadership.

On April 9, the Citigroup research team released a report expressing an optimistic view on Alibaba Cloud's latest developments in AI, stating that the acceleration of AI application development, increased investment, and open ecosystems are positive signals, and maintained a "Buy" rating on Alibaba.

Citigroup's valuation of Alibaba is based on the segmented valuation of its business units, including Taobao and Tmall business, Cloud Intelligence Group, and other consolidated business units' price-to-earnings and price-to-sales ratio assumptions. It is expected that the net profit of Taobao and Tmall business for the fiscal year 2026 will be at a 10x price-to-earnings ratio, the revenue of Cloud Intelligence Group for the fiscal year 2026 will be at a 5x price-to-sales ratio, and the consolidated business segment (excluding Taobao, Cloud, and N+ business) will be at a 2.0x price-to-sales ratio.

Citigroup believes that despite some risk factors (such as failure in executing new retail strategies, pressure from investment expenditures, and slowing user traffic growth), Alibaba Cloud's technological advantages and strategic layout will provide momentum for its long-term development.

Accelerating AI Application Development: Enhanced Investment, Prosperous Applications, Open Ecosystem

The Citigroup research report analyzes that since 2022, Alibaba Cloud has observed strong growth in foundational models and a trend of accelerated development of AI applications, aiming for deep integration with various industry verticals. To seize comprehensive AI opportunities, Alibaba Cloud has adopted three major measures:

1. Enhanced Investment: 380 billion RMB investment in AI infrastructure over the next three years

Citigroup pointed out that Alibaba Cloud plans to invest 380 billion RMB in AI infrastructure construction over the next three years. This substantial investment will be used to enhance computing, storage, and networking capabilities to meet the latest demands of AI development. Such large-scale investment will provide strong support for Alibaba Cloud's continued development in the AI field.

2. Prosperous Applications: Tongyi Large Model widely applied across industries

Citigroup emphasized that Alibaba Cloud's Tongyi Large Model has served 90% of internet companies, listed commercial banks, automobile manufacturers, smartphone brands, and over 1,000 government units. As of January 2025, more than 290,000 enterprises and developers have used the Tongyi model through the Bailian platform's API calls, demonstrating the broad application potential of AI technology across various industries.

3. Open Ecosystem: Building a comprehensive AI application ecosystem

Citigroup believes that Alibaba Cloud has built a comprehensive AI application ecosystem through an open platform and partner programs. The Bailian platform integrates multiple external models and collaborates with over 1,600 active partners to serve more than 400,000 active customers. This open ecosystem attracts a large number of developers and enterprises, jointly promoting innovation and application of AI technology