Alibaba’s (NYSE:BABA) multi-billion dollar investment in artificial intelligence is beginning to pay off for the Chinese e-commerce giant, defying critics that said it will take years for any company to see the benefits from their massive AI budgets.
In September, Alibaba (NYSE:BABA) said it would increase its current $53B budget for AI and cloud infrastructure, reflecting the company’s confidence in its usefulness to lure in shoppers by personalizing search results to enhanced virtual try-ons. According to comments from Alibaba’s e-commerce business quoted by CNBC, the company is already seeing a 12% increase in returns on advertising spending.
“It’s very rare to see double-digit changes,” Kaifu Zhang said through a translator, and predicts that the company’s embrace of AI will result in a “very significant” positive impact on Alibaba’s gross merchandise volume (GMV) during this year’s Singles Day shopping event, beginning November 11.
During the company’s most recent earnings call, Alibaba’s CEO assured investors that the company would need to made investments in e-commerce and AI on an “historical scale” to capitalize on an unprecedented time in the industry.
“Looking ahead, Alibaba Group has 2 historic opportunities, to build a technology platform centered on AI + Cloud and to create a comprehensive shopping and daily life services consumption platform. We will invest at scale to capture the opportunities. This also marks a new entrepreneurial chapter for the company after 26 years,” Yongming Wu said to analysts on the call.
“With a strong balance sheet, operating cash flow and business momentum, we are well positioned to support these investments, drive sustainable growth and strengthen core capabilities that would define Alibaba’s future,” he added.