Elinor Leung

Alibaba is better positioned than Tencent for AI monetization because its cloud business is benefiting from model-as-a-service, with external cloud revenue accelerating to 40% year-on-year and expected to further accelerate with margin expansion. Management guided AI revenue to triple and contribute over 50% of cloud revenue within a year, driven by generative AI applications in coding, video, and enterprise productivity, where customers are willing to pay higher prices for differentiated capability. Alibaba's full-stack AI service (cloud, model, application) gives it the lowest cost per million token, enabling it to capture the largest dollar amount in cloud services as the largest and fastest-growing cloud provider in China with 28% market share.