Will Alibaba's Cloud Business Ever Generate a Profit?
Alibaba (NYSE: BABA) is often called the "Amazon (NASDAQ: AMZN) of China" because it's the country's largest e-commerce and cloud infrastructure company. But that generalization glosses over two key differences between the tech giants.
First, Alibaba's online marketplaces don't take on inventories, but Amazon does. Second, Alibaba generates all of its profits from its core commerce business, and its cloud business is unprofitable. Amazon's cloud platform, Amazon Web Services (AWS), is consistently more profitable than its online marketplaces.
Therefore, Alibaba subsidizes the growth of its cloud platform with its e-commerce profits, while Amazon supports its e-commerce business with its cloud platform's profits.
Source Fool.com
