Alibaba (NYSE: BABA) said it will invest $28bn into its cloud infrastructure over the next three years as demand for services like live streaming and video conferencing increases. The Chinese e-commerce giant had generated year over year cloud revenue growth of 62% in the latest quarter while working from home policies amid the coronavirus outbreak has raised the demand for its cloud products in the last two months.
The huge investment of $28bn, which is more than the $23bn the company made in revenue over the latest quarter. Alibaba is a leading cloud provider in the Asia Pacific market, according to data body Gartner.
“By increasing our investment on cloud infrastructure and fundamental technologies, we hope to continue providing world-class, trusted computing resources to help businesses speed up the recovery process, and offer cloud-based intelligent solutions to support their digital transformation in the post-pandemic world,” Jeff Zhang, president of Alibaba Cloud Intelligence and chief technology officer of Alibaba Group, said.
Alibaba holds 46% of the Chinese cloud market share based on research firm Canalys data, well above from Tencent Cloud and Baidu Cloud market share of 18% and 8.8%, respectively. The health emergency has increased the demand for Alibaba’s products like DingTalk, a workplace chat app used by both businesses and schools.
Alibaba stock price has recovered the majority of losses from March low; the stock trades slightly below its 52-weeks high of $231. Whats more bullish indicators are making it one of the favorite stock for day traders.
Broker KeyBanc has provided a price target of $255, implying a significant upside from the current level of $209 a share. Its analyst Hans Chung believes the Chinese e-commerce giant is likely to extend the momentum due to the “strong desire for online sales.
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