Chinese e-commerce giant Alibaba (BABA) reported stellar fiscal first-quarter earnings on Thursday propelled by revenues that spiked 59%, surging past Wall Street estimates. And while talk of e-commerce transactions soaring on mobile dominated the announcement, analysts also paid close attention to the company\u2019s cloud computing business, Alibaba Cloud \u2014 and for good reason.<\/p>\n
Founded in 2009, Alibaba Cloud has evolved into China\u2019s dominant cloud computing services provider, offering clients including Dutch electronics giant Philips, Schneider Electric and marketing platform Blogmint a wide range of storage, security, and database management options. For its fiscal first quarter, the company reported Alibaba Cloud revenues swelled 156% year-over-year to $188 million with 577,000 paid users.<\/p>\n
Analysts who follow the company closely expect Alibaba Cloud to become a key growth driver in the medium- to long-term.<\/p>\n
\u201cAliCloud is massively underestimated in our view,\u201d wrote Oppenheimer internet analyst Jason Helfstein in a July report. China\u2019s cloud industry is on the brink of massive growth, with Alibaba Cloud best positioned to reap the benefits, he added. In fact, Helfstein expects Alibaba Cloud\u2019s revenues will grow 112% annually \u2014 more than the Street\u2019s estimates of 82% \u2014 growing from just 3% of Alibaba\u2019s overall annual revenues currently to 18% by 2020.<\/p>\n
One of Alibaba Cloud\u2019s greatest advantages remains its China roots, which have enabled Alibaba Cloud to rapidly grow locally in ways foreign competition such as Amazon Web Services and Microsoft Azure could not, due to China\u2019s data sovereignty and cyber-security laws.<\/p>\n
More challenging will be growth in the US, where Amazon Web Services in particular is virtually synonymous with \u201ccloud computing\u201d and which Morgan Stanley values at $91 billion. (Alibaba Cloud, meanwhile, is valued by the firm at $39 billion.)<\/p>\n
To that end, Alibaba Cloud has made deals with graphics chipmaker Nvidia (NVDA) to use its silicon for crunching certain tasks faster, as well as HTC to help power the Taiwanese company\u2019s VIVE virtual reality headset. And in July, the cloud services provider appointed former Microsoft scientist Jingren Zhou as chief scientist to lead research around A.I. and big data.<\/p>\n
Alibaba chief financial officer Maggie Wu said on the Thursday the company would spend aggressively on Alibaba Cloud\u2019s expansion efforts, and in turn, be in the red, until such time when the cloud services provider amasses one million paid customers.<\/p>\n
\u201cOne million is a pretty good point of customer base,\u201d added Wu. \u201cAt that point, profitability will start to show.\u201d<\/p>\n
–<\/p>\n
Source: Yahoo Finance<\/p>\n","protected":false},"excerpt":{"rendered":"
Chinese e-commerce giant Alibaba (BABA) reported stellar fiscal first-quarter earnings on Thursday propelled by revenues that spiked 59%, surging past Wall Street estimates. And while talk of e-commerce transactions soaring on mobile dominated the announcement, analysts also paid close attention to the company\u2019s cloud computing business, Alibaba Cloud \u2014 and for good reason. Founded in […]<\/p>\n","protected":false},"author":14,"featured_media":239064,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[106],"tags":[],"yoast_head":"\n