Chinese e-commerce giant Alibaba has lost $20 billion in market capitalization after it became known that this company will no longer spin-off and list its cloud computing business as a separate functional unit.
The reason for this decision was the restrictions imposed by Washington on the supply of advanced chips to China. The company made a statement of the relevant content last Thursday, November 16. This decision is more likely to worsen Alibaba’s competitiveness. The company said that export restrictions imposed by the US leadership created a situation of uncertainty about the prospects of Cloud Intelligence Group, which competes with Amazon Web Services, Microsoft Azure, and Google Cloud Platform.
Alibaba CEO Joe Tsai says that shortly the Chinese e-commerce giant will focus on creating a model of sustainable growth. According to him, this strategy of activity will be based on an increase in demand for network and scalable computing services managed by artificial intelligence.
At the time of the market close in Hong Kong on Thursday, the market capitalization of the Chinese e-commerce giant was estimated at $211.6 billion. On Friday, this figure decreased to $191.1 billion. The company’s stock price in Hong Kong has fallen by almost 15% since the beginning of this year.
Investors hoped that the Chinese e-commerce giant’s cloud computing business would become a separate functional structure. In March, analysts estimated that the value of the Cloud Intelligence Group could range from $41 billion to $60 billion. At the same time, market commentators warned that the listing could become an object of attention for Chinese and foreign regulators.
Experts state the fact that Alibaba, one of the largest technology companies in China, has faced the consequences of geopolitical tensions between Beijing and Washington. This brand, however, is actively investing in artificial intelligence, striving to meet modern trends and benefit from new-generation digital developments, the scale of distribution of which demonstrates steady growth. Alibaba has already integrated machine intelligence technologies into its products and services. Advanced solutions allow the company to personalize commercial offers, analyze data arrays, and develop marketing elements on its Tmall, Taobao, and 1688 websites.
In October, Alibaba presented a new version of its artificial intelligence model called Tongyi Qianwen 2.0. This AI configuration is a large language model that is trained based on huge amounts of information and forms a kind of digital springboard for apps of advanced technology capable of generating content.
As we have reported earlier, Alibaba and Tencent Invest in AI Startup.
