Alibaba's financial report highlights a robust performance in its AI+Cloud business, with Alibaba Cloud's revenue growth accelerating to 26%, marking a three-year high. Notably, AI-related product revenue has seen triple-digit year-on-year growth for eight consecutive quarters. As AI demand surges, so does the demand for computing, storage, and other public cloud services to support these applications.

Alibaba plans to further invest in AI infrastructure and product R&D, committing 380 billion yuan to AI capital expenditures over the next three years.

Breakdown of Alibaba's Computing Power Industry Chain

Upstream: Chips and Core Hardware

Encompassing IP cores, EDA tools, and chip manufacturing. Alibaba has acquired ZTE Microelectronics to establish a comprehensive IP core system spanning CPU, GPU, and NPU. Additionally, it has partnered with Huada Jiutian to develop EDA tools tailored for AI chips.

In chip manufacturing, SMIC serves as a key foundry, with Alibaba Group accounting for 18% of its chip orders in H1 2025. Cambricon is the primary supplier of AI inference chips to Alibaba Cloud, with its Thinker 590 chip compatible with the Alibaba Cloud PAI platform.

Midstream: Servers and Network Equipment

This segment includes servers, network equipment, and data center construction. Inspur Information is Alibaba's primary AI server supplier, leveraging the JDM model for deep customization. Zhongji Xuchuang leads in optical modules, with 800G products constituting a significant portion of Alibaba's procurement. Data Harbor, a core IDC service provider for Alibaba Cloud, is involved in the construction of ultra-large data centers in Zhangbei, Langfang, among others, and will handle Alibaba's AI computing power infrastructure orders for the next three years. Hangzhou Iron and Steel and Alibaba have jointly built the Zhejiang Cloud Computing Data Center to support the inference computing power needs of the Tongyi Qianwen large model.

Downstream: Computing Power Services and Applications

Referring to the application scenarios of computing power services, Qianfang Technology collaborates with Alibaba Cloud on "City Brain 2.0". Runhe Software develops edge computing modules based on Alibaba's Xuantie processor, leveraging Tongyi Qianwen to optimize financial risk control models. ChineseAll and Alibaba Cloud partner in constructing a digital content ecosystem, with ChineseAll's education business accessing Alibaba's Tongyi Qianwen large model.

Profitability of Enterprises in Alibaba's Computing Power Industry Chain

Corporate profitability is typically measured by the amount and level of corporate earnings over a specified period, involving an in-depth analysis of profit margins.

This article, part of the "Corporate Value" series, focuses on "Profitability," examining 27 enterprises within Alibaba's computing power industry chain. Evaluation indicators include return on equity, gross profit margin, and net profit margin, based on historical data for static analysis only and not intended as investment advice.

10th: Sugon

Industry Segment: Other Computer Equipment

Profitability: Return on Equity 9.81%, Gross Profit Margin 29.16%, Net Profit Margin 15.16%

Performance Forecast: ROE has fluctuated between 9%-11% in the past three years, with the latest forecast average of 11.36%

Main Products: IT equipment, generating 89.04% of revenue with a gross profit margin of 27.34%

Company Highlights: Sugon provides liquid-cooled server technology to Alibaba Cloud, with its silicon cube liquid-cooled servers deployed in the Alibaba Cloud Northwest Data Center.

9th: Kelong Technology

Industry Segment: Other Power Equipment

Profitability: Return on Equity 6.96%, Gross Profit Margin 25.20%, Net Profit Margin 4.23%

Performance Forecast: ROE has fluctuated between 6%-13% in the past three years, with the latest forecast average of 11.91%

Main Products: New energy products, contributing 46.51% of revenue with a gross profit margin of 16.78%

Company Highlights: Kelong Technology's offerings include IDC service revenue, data center products, smart power products, and new energy products. The company collaborates with Alibaba in data center operations.

8th: Inspur Information

Industry Segment: Other Computer Equipment

Profitability: Return on Equity 12.06%, Gross Profit Margin 6.85%, Net Profit Margin 2.00%

Performance Forecast: ROE has ranged between 9%-14% in the past three years, with the latest forecast average of 13.26%

Main Products: Servers and components, accounting for 99.33% of revenue with a gross profit margin of 6.76%

Company Highlights: Inspur Information supports domestic AI-related enterprises such as Baidu, Alibaba, Tencent, Qihoo, and iFLYTEK with computational resources.

7th: Eurotech

Industry Segment: Other Power Equipment

Profitability: Return on Equity 13.33%, Gross Profit Margin 21.36%, Net Profit Margin 7.07%

Performance Forecast: ROE has steadily risen to 13.33% in the past three years, with the latest forecast average of 13.82%

Main Products: Power adapters, contributing 44.04% of revenue with a gross profit margin of 18.26%

Company Highlights: Eurotech specializes in power adapters, data center power supplies, and other power supplies. It customizes immersed liquid-cooled centralized power supplies for Alibaba, used in the Panjiu server power supply system.

6th: Huaqin Technology

Industry Segment: Consumer Electronics Components and Assembly

Profitability: Return on Equity 13.56%, Gross Profit Margin 9.30%, Net Profit Margin 2.65%

Performance Forecast: ROE has declined to 13.56% in the past three years, with the latest forecast average of 14.91%

Main Products: High-performance computing, generating 57.54% of revenue with a gross profit margin of 7.77%

Company Highlights: Huaqin Technology collaborates with leading internet and cloud computing clients such as Alibaba, Tencent, and ByteDance in the data business sector, serving as a core supplier.

5th: Zhaolong Interconnection

Industry Segment: Communication Cables and Accessories

Profitability: Return on Equity 13.38%, Gross Profit Margin 16.37%, Net Profit Margin 8.35%

Performance Forecast: ROE has fluctuated between 9%-15% in the past three years, with the latest forecast average of 13.83%

Main Products: Data cables, comprising 73.68% of revenue with a gross profit margin of 11.69%

Company Highlights: Zhaolong Interconnection specializes in data cables, special cables, and connection products. The company primarily collaborates with Alibaba on DAC high-speed interconnection products.

4th: Ruijie Networks

Industry Segment: Communication Network Equipment and Devices

Profitability: Return on Equity 13.04%, Gross Profit Margin 38.62%, Net Profit Margin 4.91%

Performance Forecast: ROE has ranged between 9%-27% in the past three years, with the latest forecast average of 17.86%

Main Products: Network equipment, contributing 82.52% of revenue with a gross profit margin of 37.86%

Company Highlights: Ruijie Networks specializes in network equipment, network security products, and cloud desktop solutions. It is a prominent supplier of data center switches to leading internet companies like Alibaba.

3rd: Baoxin Software

Industry Segment: IT Services

Profitability: Return on Equity 20.67%, Gross Profit Margin 34.77%, Net Profit Margin 17.05%

Performance Forecast: ROE has ranged between 20%-25% in the past three years, with the latest forecast average of 20.88%

Main Products: Software development and engineering services, accounting for 72.64% of revenue with a gross profit margin of 31.14%

Company Highlights: Baoxin Software's offerings include software development and engineering services, service outsourcing, and system integration. The company provides data center services to Alibaba.

2nd: Sunway Co., Ltd.

Industry Segment: Printed Circuit Boards

Profitability: Return on Equity 4.60%, Gross Profit Margin 10.04%, Net Profit Margin 1.89%

Performance Forecast: The highest ROE in the past three years was 4.60%, with the latest forecast average of 17.03%

Main Products: Printed circuit boards, generating 52.71% of revenue with a gross profit margin of 2.75%

Company Highlights: Sunway Co., Ltd.'s products include printed circuit boards, backlight modules, computing power, and related services. The company has signed an agreement with Alibaba Cloud to jointly construct a 10,000P computing power center in Qingyang within two years.

1st: Envicool

Industry Segment: Other Special Equipment

Profitability: Return on Equity 16.88%, Gross Profit Margin 28.75%, Net Profit Margin 9.90%

Performance Forecast: ROE has steadily risen to 16.88% in the past three years, with the latest forecast average of 18.94%

Main Products: Data center temperature control and energy-saving products, comprising 53.19% of revenue with a gross profit margin of 26.97%

Company Highlights: Envicool specializes in providing precision temperature control and energy-saving solutions and products. Its data center temperature control products and solutions are deployed in Alibaba's data centers.