China’s Cloud Service Spending Reaches $9.4 Billion in Q2 2024, Led by AI Integration

China’s cloud infrastructure spending reached $9.4 billion in the second quarter of 2024, an 8% increase from the previous year, according to Canalys.

This growth highlights the country’s ongoing investment in cloud services, largely driven by advancements in artificial intelligence (AI).

Key Market Players

Alibaba Cloud, Huawei Cloud, and Tencent Cloud are the dominant forces in China’s cloud sector, holding a combined 71% market share.

Alibaba Cloud leads with a 36% share, propelled by double-digit growth in its public cloud business. The company has seen a surge in paying customers for its AI products, reporting a 200% quarterly increase. Revenue from AI-related services is growing rapidly, with triple-digit gains.

Huawei Cloud ranks second, with a 19% market share. It posted a steady 13% growth rate in Q2. Huawei’s launch of the Pangu 5.0 foundational model in June 2024, which offers diverse configurations for AI training, has further strengthened its position in AI-cloud integration.

Tencent Cloud comes in third, with a 16% market share. Tencent has introduced various AI models and launched a promotion offering 100 million free tokens to attract new enterprise users. The company has also provided free migration tools to support cloud transitions.

At its September Global Digital Ecosystem Summit, Tencent reported a 150% increase in the number of partners generating more than RMB 1 million ($142,000) in revenue.

AI Fueling Growth

AI is proving to be a significant driver of growth in China’s cloud market. Major providers are integrating AI technologies into their cloud services, enabling businesses to accelerate their digital transformation.

Despite challenging macroeconomic conditions, AI advancements are helping companies unlock new growth opportunities, solidifying the expansion of China’s cloud sector.