China’s cloud infrastructure services market grew 21 percent year on year to US$12.4 billion in Q2, according to Omdia.
Marking the first time more than 20 percent growth since early 2024, the increase was driven primarily by accelerating AI workloads.
Omdia reports that enterprises are shifting from simple model calls to more complex, business-aligned AI use cases, including industry-specific models and early AI agent deployments.
Alibaba Cloud held its market leader position with a 34 percent share on 26 percent year-on-year revenue growth, supported by eight consecutive quarters of triple-digit AI-related revenue expansion.
It is doubling down on AI infrastructure, with Q2 capital expenditure reaching CNY38.6 billion (US$5.4 billion) and a planned CNY380 billion investment over the next three years to expand its cloud and AI footprint.
Foundation model advances and maturing toolchains are pushing enterprises to redirect parts of traditional CPU-based workflows to model inference engines, seeking more automation and flexibility.
“In this phase of AI transformation, sustained investment in long-term capability building is more valuable than protecting short-term margins. China’s hyperscale cloud providers are accelerating their commitments in cloud and AI infrastructure, aligning with global investment trends,” said Rachel Brindley, Senior Director of Omdia.
To address this demand, Alibaba Cloud has rolled out upgrades across its Qwen3 family and launched its flagship Qwen3-Max foundation model with more than one trillion parameters designed for complex analysis and agent-driven workloads.
The cloud vendor is also building out its agent ecosystem via Agent Bay, a cloud-based execution environment and toolkit that lets AI agents perform real operational tasks for customers.
Internationally, Alibaba Cloud plans new regions in Brazil, France and the Netherlands, underlining its ambition to translate domestic AI momentum into global cloud growth.
Huawei Cloud and Tencent Cloud came in second and third with 17 percent and 10 percent shares respectively, supported by heavy GPU investment and their own AI agent platforms.
“AI agents are emerging as a meaningful extension to foundation-model capabilities. While adoption is still early, the growing availability of agent platforms is encouraging ecosystem partners to expand their roles, from simple model consumption to participating in workflow automation and task-oriented application development,” said Yi Zhang, Senior Analyst of Omdia.
Entelechy Asia 