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Alibaba Cloud plans fewer Western chips to boost AI service margins

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On an earnings call, Alibaba CFO Toby Xu said servers typically run for five years and AI server revenue can cover costs in three years. Alibaba expects to cut AI hardware payback to 2.5 years by increasing self-developed chips in data centers. The company spent $10 billion on AI infrastructure in the first quarter, 75% higher year over year, while e-commerce revenue rose 4% to $30.34 billion and Alibaba Cloud AI offerings grew 45% to $7.14 billion, aiming for about $10 billion next quarter.

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