Baidu and Alibaba take lead in China's AI cloud market

China's AI cloud market surged 55% in 2024 to $2.7B, with Baidu and Alibaba each holding around a quarter of the market.

China's public cloud market for artificial intelligence expanded sharply in 2024, with Baidu and Alibaba taking the lead as companies raced to build and deploy AI systems. A report from consultancy IDC shows the market reached 19.6 billion yuan (US$2.7 billion), up 55 percent from the year before.

Baidu and Alibaba each held about a quarter of the market, followed by Tencent and Huawei. The rise was driven by growing demand for both generative AI applications and cloud resources that allow companies to train their own models.

IDC said the market was reshaped by "disruptive innovations" in AI. Before 2022, demand focused on uses such as optical character recognition, quality checks, and surveillance. By 2023, large language models—similar to those powering ChatGPT—became the main source of growth. In the second half of 2024, AI services began shifting toward agent-based systems, where autonomous software can handle complex tasks with less human input.

This transition has encouraged companies to adopt AI cloud services more quickly, both to run advanced applications and to build tools tailored to their industries.

Growth across AI service segments

Of the five main areas within AI cloud services, computer vision remained the largest. Spending in that segment rose 34 percent to 8.1 billion yuan, with Tencent and Baidu leading.

Machine learning was the fastest-growing category, climbing 164 percent to 5.3 billion yuan. Huawei and Alibaba were the top players here. Machine learning services allow businesses to analyze data and improve performance without having to build systems from scratch.

IDC suggested cloud providers need to rethink their architectures to handle the demands of AI, and also stressed the importance of ethical safeguards to reduce bias and improve transparency.

The surge in AI is part of a wider expansion in China's cloud market. Spending in the first quarter of 2025 reached US$11.6 billion, up 16 percent year on year, according to research firm Canalys.

Alibaba led the broader cloud sector in the March quarter with a 33 percent share, followed by Huawei with 18 percent. Both companies are investing heavily to strengthen their AI services.

Push for expansion

Liu Weiguang, senior vice-president of Alibaba Cloud, said in June that the company plans to extend its AI services to overseas data centers this year. The move is part of a 380 billion yuan investment plan spread over the next three years.

Baidu is also building out its AI offerings. Earlier this month it introduced a set of "digital employees" powered by AI agents. These systems combine technical capabilities with industry knowledge and are being marketed as virtual staff for roles such as marketing managers, loan officers, and car sales representatives. The company said these agents are designed to help businesses streamline daily operations.

With China's largest technology firms pushing forward, competition in AI cloud services is expected to intensify, shaping how enterprises at home and abroad use artificial intelligence in the years ahead.