More bold moves from the tech sector: Alibaba (NYSE:BABA) said on Monday it would invest 200 billion yuan ($28.26 billion U.S.) in its cloud computing division over the next three years, highlighting how critical an area this is to the e-commerce giant’s future growth.
A statement from the company Monday morning said the money will be used to invest in infrastructure and technologies related to operating systems, servers, chips and networks, adding that it was spurred by the coronavirus pandemic.
"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," Jeff Zhang, president of Alibaba Cloud Intelligence, said in a statement.
Alibaba is the biggest cloud computing provider by market share in China — but it still trails U.S. giants Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ:MSFT) globally despite its international push, according to Synergy Research.
But Alibaba has put a concerted effort on cloud computing and analysts as well as executives see it becoming a critical area in the future, despite it currently accounting for just 7% of the company’s total revenue.
The latest investment could help the company expand its product and customer base, particularly in international markets, as it looks to battle Amazon and Microsoft. In China, meanwhile, Alibaba is facing rising competition in the cloud space from e-commerce rival JD.com.
BABA shares popped $4.51, or 2.2%, to $214.01.
