Alibaba Cloud, Alibaba’s cloud computing company, unveiled its ChatGPT-style product Tongyi Qianwen during the 2023 Alibaba Cloud Summit on Tuesday morning.
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Alibaba announced plans to spin off its cloud division as a separate, publicly traded company, while the e-commerce giant’s quarterly revenue did not exceed expectations.
“We are taking concrete steps toward unlocking value from our business and are pleased to announce that our Board of Directors has approved a full spin-off of the Cloud Intelligence Group via a dividend distribution to shareholders, with the intent of becoming an independent, publicly listed company,” said Daniel Chang, the company’s CEO.
Alibaba shares were down 1% in US pre-market trading as of 12:38pm London time.
Here’s what Alibaba did in the quarter that ended March 31, 2022, compared to Refinitiv consensus estimates:
- he won: 208.2 billion yuan ($29.6 billion) vs. 210.2 billion yuan expected, up 2% year-on-year;
- Non-GAAP diluted earnings per share: 1.34 yuan vs. 2.08 yuan expected, up 35% year on year
The report is Alibaba’s first since it split into six units and is also the first whose numbers reflect China’s reopening. The country abruptly ended in December its strict Covid controls, such as lockdowns and travel restrictions.
The year got off to a lukewarm start, as overall sales of online physical goods remained weak, the heads of major e-commerce platforms suggested in February.
Retail sales in China rose 18.4% in April, according to the latest economic data. China’s economy grew by 4.5% in the first quarter, achieving the fastest pace in a year. The performance was expected to boost Alibaba’s sales.
The company operates two of the largest online shopping sites in China: Taobao and Tmall. Despite rising competition, Alibaba’s results remain an important indicator of the world’s second largest economy.
China generates nearly 50% of the world’s online shopping transactions.
Thursday’s earnings numbers were the first since Alibaba announced a fundamental overhaul of its organization, splitting the company into several distinct units in a development many analysts interpreted as indicating an easing of Beijing’s crackdown on technology companies.
The new corporate structure is divided into six divisions: Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, and Digital Media and Entertainment Group.
Meanwhile, China’s regulatory tightening on technology in the past two years has begun to wane, as Beijing’s enforcement of rules has become more predictable.
Some investors are betting on a strong recovery for China’s tech giants. On Tuesday, Michael Berry of The Big Short fame boosted his bets on Chinese e-commerce companies Alibaba and JD.com, doubling his stake in Alibaba to $10.2 billion and his acquisition of JD.com to $11 million.
Investors have been looking for any comment Alibaba makes on AI. The company is working on its own ChatGPT-style product, called Tongyi Qianwen.
On Wednesday, Tencent president Martin Lau said the company is “making good progress” in building the foundation models, the systems that support intelligent chatbots like ChatGPT, after the company reported a strong rebound in revenue.