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Alibaba to Invest $28 Billion in Cloud Computing Over 3 Years

Alibaba will invest $28 billion in cloud computing over three years. The coronavirus pandemic “posed additional stress on the economy, but steers us to focus on the digital economy,” the China tech giant said.
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Alibaba Group  (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report said it would invest 200 billion yuan ($28.26 billion) in its cloud-computing operation over the next three years.

The Chinese tech giant, which also has online wholesale and retail marketplaces and other businesses, showed the fastest growth of all global cloud-service providers in first-half 2019, with revenue soaring 69% from a year earlier, according to market research firm IDC.

But Alibaba didn’t make the top five in a Synergy Research Group ranking of global market share for cloud companies in the third quarter of 2019.

Amazon  (AMZN) - Get Inc. Report placed first, with 39%; Microsoft  (MSFT) - Get Microsoft Corporation Report second, with 19%; Alphabet  (GOOGL) - Get Alphabet Inc. Report third, with 9%;  (CRM) - Get Salesforce Inc. Report fourth, with 4%; and International Business Machines  (IBM) - Get International Business Machines Corporation Report fifth, with 3%. All the others had 21%.

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But Alibaba is No. 1 in China. It said the new investment will focus on operating systems, servers, chips and networks. The coronavirus pandemic sparked the move, it said.

The 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 warned in February that the coronavirus, which began in China, was causing it trouble. “We are being tested,” Alibaba Chief Executive Daniel Zhang said.

The cloud accounts for 7% of Alibaba’s revenue.

At last check, Alibaba shares traded at $213.56, up 1.9%. The stock has slid 7% over the three months through Monday, outperforming the S&P 500 index, which has slumped 15%.