Alibaba outpaces ByteDance, Tencent in China’s AI cloud: report

Alibaba Cloud held 35.8% of China’s AI cloud services market in H1 2025, according to research firm Omdia, outpacing ByteDance’s Volcano Engine at 14.8%, Huawei Cloud at 13.1%, Tencent Cloud at 7%, and Baidu Cloud at 6.1%.

Omdia said China’s AI cloud market could more than double to 51.8 billion yuan (US$7.3 billion) in 2025 from 20.8 billion yuan this year, with an expected annual growth rate of 26.8% through 2030.

Alibaba Cloud, the cloud computing arm of Alibaba Group, reported 33.4 billion yuan (US$4.6 billion) in revenue for the June quarter, up 26% year-on-year, making it the company’s fastest-growing segment.

The company invested over 100 billion yuan in AI and cloud infrastructure in the past four quarters.

Frost & Sullivan reported that Alibaba’s Qwen large language models made up 17.7% of enterprise-grade AI usage in China in H1 2025, ahead of ByteDance’s Doubao at 14.1%, and DeepSeek at 10.3%.

🔗 Source: South China Morning Post

🧠 Food for thought

Implications, context, and why it matters.

Regional dominance doesn’t guarantee global cloud leadership

Alibaba Cloud’s 35.8% share in China’s AI cloud market contrasts sharply with its much smaller global footprint, where Alibaba and Tencent combined hold just 6% of the worldwide market2.
This pattern has persisted over time. Alibaba maintained around 36.7% of China’s cloud market in 2022 while ranking only fourth globally with a 5.4% share as of 20193 4.
The disparity highlights how regulatory barriers, data sovereignty requirements, and local market dynamics can create strong regional moats that don’t translate to international expansion.
Meanwhile, AWS dominates globally with 30% market share and Microsoft Azure holds 20%, demonstrating the challenge Chinese cloud providers face competing outside their home market2.

Infrastructure investment arms race intensifies as AI demand explodes

Alibaba’s massive infrastructure spending of over 100 billion yuan ($14 billion) in the past four quarters reflects the capital-intensive nature of competing in AI cloud services1.
This investment scale pales compared to global competitors, with major US tech companies planning to spend over $320 billion on AI infrastructure in 2025—including Amazon’s planned $100 billion commitment alone5.
The dramatic growth projections for China’s AI cloud market, expected to jump from 20.83 billion yuan in 2024 to 51.8 billion yuan in 2025, justify these heavy infrastructure investments1.