Alibaba is locked in a battle with other Chinese tech giants and startups to release more capable, low-cost frontier AI models, highlighting the rapid pace of advancement of Chinese AI models and their shorter release cycles.
But as competition heats up, firms are pivoting towards offering better agentic and coding capabilities to capture more of China's lucrative domestic enterprise market.
Alibaba is also a major investor in other Chinese frontier AI startups including Moonshot, and supplies it with cloud computing infrastructure.
Advanced chips produced by Alibaba's in-house unit T-head are already being deployed at scale on "supernodes" - massive server racks linking hundreds of semiconductors together - for AI model training and inference, Wu said. The company is banking on scaling up deployment of its in-house chips to reduce capex costs and to generate future revenue.
Wu said the company will continue to invest in developing frontier AI models even though current monetisation remains inadequate, because it is committed to reaching artificial general intelligence (AGI) - where autonomous systems surpass human intelligence.
AI model companies "have their eyes on that ultimate end game, where I think that the monetisation level will be significantly higher, much higher than what you see today," he said.
Earlier this year Alibaba split its AI businesses from its cloud computing arm and tasked Wu with leading the "Alibaba Token Hub" group, as it races to make its AI segment profitable.
Alibaba recently reorganised its businesses into four main units: e-commerce, AI cloud and computing services, AI model applications and other units.
Alibaba expects its quick commerce business to achieve overall profitability in the fiscal year 2029, and acknowledged "short-term macroeconomic challenges" impacting China's domestic e-commerce landscape, Chief Financial Officer Toby Xu said on the call.
Alibaba's fintech affiliate Ant Group reported 1% year-on-year growth in quarterly profit, Reuters calculations showed, as it has attempted to pivot towards agentic AI commerce, AI digital health applications and embodied AI models in recent years.
($1 = 6.7218 Chinese yuan renminbi)
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