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Alibaba Aims To ‘Speed Up’ COVID-19 Recovery With $28 Billion Data Center Investment

Alibaba Cloud, China’s top cloud computing provider, is investing billions in building next-generation data centers to support digital transformation needs.

China’s biggest cloud computing provider, Alibaba Cloud, will invest a whopping $28.2 billion in cloud infrastructure and the construction of data centers over the next three years as it prepares to help digital transformation efforts in a “post-pandemic world.”

"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,” said Jeff Zhang, chief technology officer and president of Alibaba Cloud Intelligence, in a statement. “By increasing our investment on cloud infrastructure and fundamental technologies, we hope to continue providing world-class, trusted computing resources to help businesses speed up the recovery process and offer cloud-based intelligent solutions to support their digital transformation in the post-pandemic world."

Aimed at building next-generation hyperscale data centers, Alibaba Cloud will invest $28.2 billion in innovation and the development of operating systems, servers and chips for its data center infrastructure.

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Alibaba Cloud plans to build additional data centers on top of its existing 63 availability zones covering 21 regions across the globe including Australia, Indonesia, Malaysia and Singapore.

Alibaba Cloud is one of the top cloud providers in the Asia-Pacific market and is striving to battle public cloud titans Amazon Web Services and Microsoft Azure as the worldwide cloud computing leader.

For its recent third fiscal quarter, which ended Dec. 31, Alibaba reported cloud revenue of $1.53 billion, representing an increase of 62 percent year over year. However, cloud sales account for approximately 7 percent of the company’s overall revenue, with the majority of revenue stemming from its retail and wholesale e-commerce businesses.

According to Synergy Research Group, the coronavirus pandemic will not affect IT spending in hyperscale data centers, as the world’s leading Capex spenders—including Amazon, Google and Facebook—will continue to spend billions on data centers in 2020. Hyperscale Capex spending on data centers reached over $120 billion in 2019.

“While there are many unknowns, what is clear is that the hyperscale operators generate well over 80 percent of their revenues from cloud, digital services and online activities. The radical shifts we are seeing in social and business behavior will actually provide some substantive tailwinds for many of these businesses,” said John Dinsdale, chief analyst at Synergy Research Group, in an email to CRN. “These hyperscale firms are much better insulated against the current crisis than most others and we expect to see ongoing robust levels of Capex.”

Alibaba Cloud has helped combat the coronavirus in China by providing access to on-demand cloud computing and artificial intelligence services to support government departments, businesses, research institutes and students during the pandemic. Alibaba Cloud made its AI-powered platform available for free to research institutions to accelerate CT image analytics, gene sequencing and services to treat and prevent the coronavirus.

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