Alibaba Cloud Plans to Lean on Its Own Chips to Lift AI Margins
Alibaba says rising margins from its AI cloud business let it recoup hardware costs faster, and it plans to swap in more self-developed chips for Western ones.
AfroEuropa Newsroom
AfroEuropa desk
Alibaba told investors that profit margins from its cloud AI business are climbing quickly enough to let it recover the cost of new hardware sooner than it had previously expected, according to reporting by The Register on the company's earnings call.
Chief financial officer Toby Xu said the company operates its servers over a five-year period, and that AI servers now generate enough revenue to cover their costs within three years. That means the machines produce free cash flow during their fourth and fifth years of service. Chief executive Eddie Wu added that some servers keep delivering cash for even longer, pointing to units bought in 2018 and 2020, equipped with Nvidia V100 and A100 accelerators, that he said remain in use by customers at close to full capacity.
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