Alibaba Says AI Investment in E-commerce Is Already Breakeven

SHANGHAI — Alibaba says its artificial intelligence investments in the company’s e-commerce operations are already paying off, Vice President Kaifu Zhang told reporters on Thursday. Zhang, who oversees AI applications for Alibaba’s commerce business, described a suite of AI enhancements the company has deployed, ranging from more personalised search results to improved virtual try-on accuracy for clothing.

The company has continued to expand its AI and cloud outlays despite market concerns about heavy tech spending with limited returns. In February, Alibaba pledged 380 billion yuan ($53 billion) of investment in AI and related infrastructure over three years, and last month it announced a further increase in such spending. Zhang said early trials of the AI tools produced consistent gains, including a 12% rise in returns on advertising spend, a rare double-digit uplift in his experience. He forecast that AI integration would have a “very significant” positive effect on Alibaba’s gross merchandise volume during this year’s Singles Day promotion, centred on November 11.

The remarks coincided with the start of Singles Day presales. Alibaba’s China e-commerce unit remains the group’s largest revenue contributor, reporting year-on-year growth of 10% in the quarter ended June 30 to the equivalent of $19.53 billion. Despite subdued consumer demand in recent years, the Singles Day period has shown strong sales momentum; research firm Syntun estimated that last year combined sales on Tmall, JD.com and PDD rose 20.1% year-on-year to 1.11 trillion yuan.

On a late-August earnings call, Alibaba framed AI and consumption as “two major historic opportunities” that justify investment at an unprecedented scale. “Our first priority at this point is making these investments,” Chief Financial Officer Toby Xu said, adding that the company may temporarily place less emphasis on profit margins while these investments are pursued, though he emphasised that margins remain a consideration.