In recent months, Alibaba Cloud has seen its 2025 fourth-quarter revenue rise approximately 25% year-over-year to ¥18.3 billion, yet its market share in Greater China slipped to 38% from 41% a year earlier as ByteDance Cloud Services, launched in mid-2025, began undercutting prices by up to 15%. Analysts at Morgan Stanley estimate that Alibaba’s operating margin in the cloud unit narrowed to 2.8% last quarter from 4.5%, driven by increased discounts on compute instances and aggressive customer acquisition incentives. Despite signing a five-year deal to provide cloud infrastructure to a consortium of Chinese state-owned enterprises, Alibaba’s leadership cautions that further investment of at least ¥5 billion in data-center capacity will be required to defend its lead. Investor sentiment has been tempered by these margin pressures, even as global cloud peers prepare to ramp up spending in the Asia-Pacific region, intensifying pricing and technical feature competition for Alibaba Cloud.