Alibaba shares rise on AI cloud price hikes up to 34%
Cloud unit boosts computing costs amid surging AI demand, with earnings set for Thursday
Alibaba Group Holding shares rose in premarket trading on Wednesday after the Chinese e-commerce giant announced price increases of up to 34% for its cloud computing services, citing surging artificial intelligence demand and rising hardware costs.
The price increases, effective April 18, 2026, will affect dozens of cloud services and instance types, with higher-end GPU-powered instances facing increases of 25 to 34%, according to The Register. The company's homebrew Pingtouge Zhenwu 810E ASIC accelerators for AI applications will see price increases of 5 to 30%, while the Cloud Parallel File Storage service will rise by 30%, Benzinga reported.
The price adjustments come as Alibaba Cloud struggles to keep pace with demand. The company has previously stated it could not install servers fast enough to meet customer needs and was rationing GPU access to higher-spending clients, The Register noted. The hikes are considered "reasonable in the context of surging memory prices," the report added.
Alibaba's cloud business has emerged as a key growth driver, with AI-related revenues maintaining triple-digit growth for the eighth consecutive quarter in the first quarter of fiscal 2026, accounting for more than 20% of external cloud revenue, according to Nasdaq. Overall cloud revenue grew 26% year-over-year in that period, outpacing the company's overall growth rate.
The price increases represent a strategic shift toward monetizing Alibaba's substantial AI investments. CEO Eddie Wu has pledged to invest more than $53 billion in infrastructure and AI development over three years, Benzinga reported. The company recently formed the "Alibaba Token Hub (ATH)" business unit to consolidate its AI models, cloud business, and consumer AI applications, signaling a renewed focus on AI profitability.
Alibaba launched its "Wukong" enterprise-focused AI platform on March 17, 2026, designed to automate complex business tasks through AI agents. The move positions Alibaba in direct competition with Microsoft and Salesforce in the growing agentic AI market, where AI agents capable of making decisions and executing tasks consume significantly more computing resources than traditional chatbots, potentially driving higher revenue.
Despite strong adoption of its Qwen large language model—the mobile app grew from 31 million users in January to approximately 203 million in February—Alibaba has faced challenges translating its open-source AI efforts into commercial advantage, Benzinga noted. The company recently lost a key model developer amid leadership changes within the Qwen team.
Alibaba shares were up 2.93% at $140.57 in premarket trading on Wednesday, Benzinga reported. The stock has been trading near six-month lows, with a market capitalization of $322.8 billion and a price-to-earnings ratio of 17.77, according to market data.
Analysts remain broadly positive on Alibaba's prospects, with a consensus rating of 37 buy recommendations and 4 hold ratings, and a target price of $198.82, representing significant upside from current levels. The company is scheduled to report its third-quarter fiscal 2026 earnings on Thursday, March 19, with Wall Street anticipating revenue between $41.59 billion and $41.96 billion.
The pricing moves come amid intensifying competition in China's cloud market, with rival Baidu also planning to increase prices for some AI cloud products by up to 30% starting next month, Benzinga reported. Nvidia Chief Executive Jensen Huang has mentioned ramping up production of H200 accelerators for China, underscoring the robust demand for AI computing power in the region.