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Mainland China cloud infrastructure services spend, Q2 2025

Mainland China's cloud infrastructure services market grew by more than 20% in Q2 2025, supported by exceptionally strong AI-driven customer demand. As foundation models continue to advance, enterprises are increasingly leveraging these enhanced capabilities to develop new AI-native applications. Some are also beginning to shift portions of traditional CPU-driven logic processing and data workflows to model inference engines to gain greater flexibility and automation.

"Beyond the rapid iteration of foundation model providers, we are also seeing rising demand from enterprises training their own bespoke models using proprietary data," said Rachel Brindley, Senior Director at Omdia. "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."

Alibaba Cloud's capital expenditure reached CNY 38.6 billion ($5.4 billion) in Q2, and the company plans to invest CNY 380 billion ($52.9 billion) over the next three years to expand its cloud and AI infrastructure footprint. Tencent Cloud's capital expenditure rose 149% year on year to CNY 17.9 billion ($2.5 billion), driven primarily by increased procurement of GPUs and servers.

At the same time, as the market explores more mature pathways for AI productization, application paradigms are rapidly shifting from simple conversational interfaces to action-capable intelligent agents. To support scalable, end-to-end agent delivery, cloud vendors are accelerating the build-out of AI platforms, including Alibaba Cloud's Agent Bay, Huawei Cloud's Versatile and Tencent Cloud's Agent Development Platform 3.0.

"AI agents are emerging as a meaningful extension to foundation-model capabilities," said Yi Zhang, Senior Analyst at Omdia. "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."

In Q2 2025, partner-driven cloud revenue accounted for 25% of the market. This share is expected to grow as ecosystem collaboration becomes a key enabler for turning AI capabilities into business value.

Alibaba Cloud retained its lead in China's cloud infrastructure market with a 34% share, while year-on-year growth strengthened to 26%. AI-related revenue has posted triple-digit growth for eight consecutive quarters and has supported a broader rebound in its core infrastructure services. Following a series of comprehensive upgrades across the Qwen3 family in July and a wave of multimodal and toolchain enhancements in August, Alibaba Cloud introduced its flagship foundation model, Qwen3-Max, in September. With over one trillion parameters and purpose-built for complex analysis and agent-driven workloads, Qwen3-Max represents a significant advancement in its frontier-model portfolio and its ability to support enterprise-scale AI. The company also launched Agent Bay, offering a cloud-based execution environment and toolset that enables AI agents to carry out real operational tasks. Internationally, Alibaba Cloud announced plans to establish new regions in Brazil, France and the Netherlands.

Huawei Cloud maintained its position as the second-largest provider in China's cloud infrastructure market in Q2 2025, delivering stable performance with 17% year-on-year revenue growth and an 17% market share. Its CloudMatrix architecture expanded from 384 to 8,192 GPUs, supported by new services such as AI Token Service and EMS to optimize inference-level compute and costs. In September, backed by full-stack investments in AI capabilities, Huawei Cloud continued to advance industry-specific adoption and support infrastructure across sectors such as manufacturing, finance, public sectors and automotive. To strengthen developers' AI-native application capabilities, Huawei Cloud also enhanced ModelArts Versatile, its enterprise-grade agent platform, with full lifecycle support and seamless MCP tool integration. According to the company, this integration can increase agent development efficiency by up to 40% and reduce deployment costs by around 30%.

Tencent Cloud held a 10% share of China's cloud infrastructure market in Q2 2025, with revenue growth accelerating as customers increased their use of GPUs and AI-related API tokens to support new workloads. In August, the company released four compact Hunyuan models (0.5B, 1.8B, 4B and 7B parameters), fully open-sourced on platforms such as GitHub and HuggingFace and designed for deployment across diverse computing environments. In September, it introduced Agent Development Platform 3.0 (ADP 3.0), an end-to-end upgrade spanning model invocation through full-chain agent development, with enhanced capabilities in reasoning, knowledge integration, workflows, multi-agent collaboration and enterprise-grade operations. Internationally, Tencent Cloud announced a $150 million investment to build its first Middle East data center in Saudi Arabia, alongside plans for a third data center in Osaka.

Omdia defines cloud infrastructure servicesas the sum of bare metal as a service (BMaaS), infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and container-as-a-service (CaaS) and serverless that are hosted by third-party providers and made available to users via the Internet.

ABOUT OMDIA

Omdia, part of Informa TechTarget, Inc. (Nasdaq: TTGT), is a technology research and advisory group. Our deep knowledge of tech markets grounded in real conversations with industry leaders and hundreds of thousands of data points, make our market intelligence our clients' strategic advantage. From R&D to ROI, we identify the greatest opportunities and move the industry forward.

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