Cloud infrastructure spending in Mainland China saw a significant increase of 16% in the first quarter of 2025, reaching a total of US$11.6 billion. This growth is primarily fueled by the rising demand for artificial intelligence (AI), which is reshaping the cloud computing landscape in the region.
As organizations increasingly prioritize AI workloads, cloud service providers in China are ramping up investments in both infrastructure and foundational model development. The transition to GPU-based cloud infrastructure is a key factor in this shift, promoting a movement away from traditional on-premises data centers towards more scalable cloud platforms.
Leading companies like Alibaba Cloud, Huawei Cloud, and Tencent Cloud are adopting various strategic initiatives to bridge advanced AI model capabilities with the specific needs of enterprises. These strategies include open-sourcing their proprietary AI models, launching complete agent platforms, and forming expanded partnership ecosystems aimed at accelerating the integration of AI technologies into business operations.
Notably, Alibaba Cloud emerged as the largest cloud service provider in Mainland China, securing a 33% market share in Q1 2025 with a year-over-year growth rate of 15%. The demand for AI-related workloads has led to remarkable performance, evidenced by triple-digit growth for seven consecutive quarters. Initiatives in April included the release of the Qwen3 hybrid inference model series, which is fully open-sourced, and new international expansion efforts, such as the opening of an AI Capability Center in Singapore and additional data centers in Malaysia and the Philippines.
Huawei Cloud followed closely, holding 18% of the market and achieving an 18% revenue growth compared to last year. In June, Huawei announced significant updates, including the launch of Pangu 5.5, a model suite optimized for various applications from natural language processing to predictive analytics. They also introduced a new platform, ModelArts Versatile, designed to streamline AI application development and supported it with a US$21 million incentive program.
Tencent Cloud, while holding 10% of the market, faced challenges due to GPU supply constraints and internal prioritization, but continued to evolve its Hunyuan AI model family, achieving notable rankings in global AI benchmarks. The launch of the Tencent Cloud Agent Development Platform (TCADP) aimed to facilitate the creation of intelligent agents, enhancing support for AI innovation across the Asia-Pacific region.
The trend across the cloud industry highlights a rapid adaptation by providers in response to the AI demand. Emphasizing the deployment of AI agent platforms and open-sourcing models has become central to their strategies, allowing them to offer solutions that are ready for enterprise application. Furthermore, such initiatives foster deeper engagement within their ecosystems, with partner-driven revenues accounting for over 25% of the market.
As cloud infrastructure services expand, variable offerings—ranging from infrastructure-as-a-service (IaaS) to serverless computing—are being shaped by AI advancements. Cloud providers are not only focusing on local enterprise needs but are also positioning themselves to compete on a global scale through continuous investments in international data centers, AI R&D, and ecosystem collaborations.
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