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Alibaba expecting first profit from cloud arm this year

Yahoo Finance's Dan Howley joins Kristin Myers to discuss.

Video Transcript

KRISTIN MYERS: Let's now look over at Alibaba. They are foreseeing its Cloud services arm turning profitable for the first time this year. So for more on this, we're joined now by Yahoo Finance's tech expert, Dan Howley. Hey, Dan.

DAN HOWLEY: Hey, Kristin, that's right. Alibaba's Cloud arm should turn a profit for the first time in its existence this year. Now, just to give you some context as to where Alibaba sits on the hierarchy of cloud service providers worldwide, according to Statista, they control about 6% of the global market share for cloud infrastructure. Number one, obviously, Amazon and AWS, Amazon Web Services, that's at 33%. Microsoft is at number-- in second place, rather, with 18%, and then Google is behind that with 9%. Then from there, it becomes kind of just, you know, a cavalcade of different companies around the same amount of market share. No real standouts from there.

But really, Alibaba is starting to push ahead, and it has more market share than the likes of IBM, Oracle, Tencent, Salesforce, so it really is becoming a force in the Cloud Marketplace. I think as we see more companies get online in China and start using a cloud, it could become quite a winner for them. And don't forget, as often as we talk about cloud infrastructure, the Cloud, how much of a buzzword it is, most companies still aren't using cloud infrastructure. There's still a huge total addressable market here that's untapped.

A lot of companies are working on legacy systems still or using some kind of in-between where they're in the Cloud and using high older systems that's called hybrid cloud, and not many yet had started using a full cloud system. So as we see more companies make that transition, you can expect Alibaba to be leading the way in China. AWS, though, will continue to likely be the winner for out the rest of the world.

KRISTIN MYERS: All right, thanks so much, Dan Howley.