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Alibaba is set to invest about 200 billion yuan ($28.2 billion) in its cloud services within the next three years. BABA stock is slightly up today in the pre-market.
Alibaba Group (NYSE: BABA) cloud services unit is going to be boosted by about $28.2 billion over three years. Sources say that the retail giant is set to invest this amount over three years. This may also be to enable the Chinese giant to go head-to-head with other technology giants. Amazon, Microsoft, and Google are obvious market leaders. This move could change all that.
Meanwhile, today in the pre-market, Alibaba (BABA) stock is 1.13% up to trade at $211.86. On Friday, the stock was slightly down (-0.0048 %). Jus t to compare, a year ago BABA stock was trading around $185. It means that it has gained around 12% within 12 months.
Alibaba Cloud Services Involve Hardware Upgrades
The said funds will be aimed at upgrading Alibaba’s cloud hardware. Servers, chips, networks, and servers are expected to be among the various hardware to be upgraded or purchased. The technology giant indicated that the COVID-19 pandemic provided an incentive for the decision to invest. Jeff Zhang, president of Alibaba Cloud Intelligence, said in a statement:
“The COVID-19 pandemic has posed additional stress on the overall economy across sectors, but it also steers us to put more focus on the digital economy.”
“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,” continued he.
The current COVID-19 situation has placed the whole world at a standstill. Many value-chains and supply chains have been decimated. Businesses are forced to use technology to stay afloat.
Working remotely is the only way this is possible. Cloud computing enables the tools for remote work and collaboration possible. Alibaba is still way behind when it comes to the global could industry. In China, it is still the market leader. The investment is to enable it to take its slice of the pie.
After the pandemic dust settles, we are going to see new trends emerge. Cloud computing is going to be one of the top-performing industries. The battle will be between brands and not between industries. This is where Alibaba may not have it easy.
New Conflict Could Emerge
It could also be a continuation of the “us vs. them” mentality that both China and the United States had before COVID-19.
There would still be losses on both sides if such a scenario were to occur. On the other hand, it could also foster a new environment for competition.
The innovation that could spur the world into the next generation of technology might just lie behind the conflicts that are based on such issues.
Alibaba has been the industry leader in several fields. It will be interesting to see how Jack Ma’s team handles its first gig without him at the helm.