Chinese e-commerce giant Alibaba has pledged to spend more than $50 billion on artificial intelligence over the next three years.
CNBC | Evelyn Cheng
SHANGHAI – Chinese technology giant Alibaba.com has already recouped its investment in artificial intelligence in the company's e-commerce business, Vice President Kaifu Zhang told reporters on Thursday.
The Chinese tech giant has been betting big that AI will generate returns, despite market concerns that companies are spending too much on the technology with little to show for it. Alibaba announced last month that it will increase its spending on AI and cloud infrastructure, after pledging in February to spend 380 billion yuan ($53 billion) on the technology over the next three years.
Zhang oversees AI applications for e-commerce at Alibaba. Earlier in the day, he shared how the company has rolled out a range of AI tools, from making search results more personal to improving the accuracy of trying on virtual clothes.
The presentation comes a day after Alibaba started pre-sales for Singles Day, China's biggest shopping event of the year, similar to Black Friday.
Zhang said preliminary testing has shown consistent results from AI, including a 12% increase in return on ad spend.
“It is very rare to see double-digit changes” in such tests, he said in Mandarin, translated by CNBC. Zhang predicted that there would be a “very significant” positive impact on Alibaba's gross merchandise volume during this year's Singles Day shopping period, which focuses on November 11, thanks to AI integration.
Alibaba's Chinese e-commerce unit remains the tech giant's biggest revenue generator, growing 10% year-on-year in the quarter ended June 30, to the equivalent of $19.53 billion.
Despite subdued Chinese consumer spending in recent years, research firm Syntun estimated 20.1% year-on-year sales growth to 1.11 trillion yuan for Alibaba's Tmall, JD.com and PDD during last year's Singles Day period.
The company in its late August earnings call cited AI and consumption as “two big historic opportunities” that will require Alibaba to make investments of “historic scale.”
“Our first priority right now is making these investments,” CFO Toby Xu said at the time. “So for now, we can put relatively less emphasis on profit margins. But that doesn't mean we don't care about margins.”
