Alibaba Cloud is planning a greater reliance on its subsidiary T-Head's proprietary chips moving forward.
Speaking during the company's recent Q2 2026 earnings call, CEO Eddie Wu told analysts that the company remains confident about its AI and cloud business and expects to see profit and gross margins increase as it "ramp[s] up deployment of our own proprietary chips in our data centers, as they account for an increasing proportion of total chips and replace commercially procured chips."
– Alibaba
These reassurances were needed during the call, with the company's quarterly net profit falling 75 percent as Alibaba ramped up its AI capital expenditure.
Operating margins were six percent, down 14 percent from the year prior.
