The demand for artificial intelligence computing power is driving up prices across the board, with major Chinese cloud providers Alibaba Cloud and Baidu Intelligent Cloud announcing price increases for related products on March 18, 2026. This move signals a clear trend of rising costs for computing resources within the domestic cloud market, mirroring similar actions taken by international players.
The price hikes, spurred by a global surge in AI demand and increasing supply chain costs, affect a range of services. Alibaba Cloud’s adjustments, as detailed on its official website, include increases of 5% to 34% on AI computing cards like the PanGu True Martial 810E, as well as a 30% rise in the cost of its CPFS (Intelligent Computing File Storage) service. Notably, the PanGu True Martial 810E chip saw the largest price jump, exceeding even those of comparable NVIDIA products. The PanGu True Martial chip, launched on Alibaba’s website earlier this year, is currently utilized by over 400 clients, including State Grid Corporation of China, the Chinese Academy of Sciences, XPeng Motors, and Sina Weibo.
Rising Costs Reflect Global Trends
Baidu Intelligent Cloud followed suit on the same day, citing the rapid development of artificial intelligence applications and a corresponding surge in computing demand, leading to significant increases in the cost of core hardware and related infrastructure. To ensure the long-term stability and service quality of its platform, Baidu Intelligent Cloud is increasing prices on AI computing-related products and services by 5% to 30%, with parallel file storage seeing an approximate 30% increase. These adjustments by domestic providers align with a broader global trend of increasing prices in the computing market.
Earlier this year, major overseas cloud providers also began raising prices. Amazon Web Services (AWS) announced a 15% price increase for EC2 instances used for large model training on January 22nd. Google Cloud followed on January 27th, increasing prices on data transfer services, AI infrastructure, and computing services, with some increases reaching as high as 100%.
Token Demand Fuels the Increase
Industry analysts point to the explosive growth in AI demand, particularly the dramatic increase in token usage, as a core driver of these price increases. The surge in demand for AI Agent applications has led to a significant increase in activity on Alibaba Cloud’s MaaS business, Baidu’s Bianlian, which experienced its highest growth rate ever between January and March of this year. Alibaba Cloud is reportedly prioritizing the allocation of scarce AI computing resources towards its token-based services.
This prioritization suggests a strategic shift for China’s largest cloud provider, leveraging its self-developed Qianwen large language model to adjust its business focus. The increasing costs are impacting not only cloud providers but also the broader cloud industry ecosystem. According to analysis from financial news sources, the price increases validate the current supply and demand imbalance for domestic computing power, indicating a shift towards a demand-driven growth phase for the cloud computing industry.
Impact on the Cloud Industry Value Chain
The benefits of these price increases are expected to be felt first by cloud providers, followed by internet data centers (IDCs), and then by suppliers of servers, networks, and databases. This tiered impact highlights the interconnectedness of the cloud infrastructure supply chain. The rising costs are likely to be passed down to consumers, as companies seek to offset the increased expenses associated with AI development and deployment.
A Tencent executive recently responded to questions regarding rising storage chip prices, suggesting that the industry will likely pass these costs on to end-users. This indicates a broader acceptance of price increases as a necessary adjustment to the current market conditions. The situation underscores the critical importance of securing access to computing resources for companies operating in the AI space.
The “Shrimp Raising” Boom and its Implications
The current surge in demand for AI computing power has been likened to a “shrimp raising” boom, a reference to the intensive resource requirements of training and running large AI models. This analogy highlights the significant investment required to participate in the AI revolution and the potential for substantial returns for those who can secure access to the necessary infrastructure. The beneficiaries of this boom are becoming increasingly clear, with Alibaba and Baidu leading the charge in raising prices and capitalizing on the growing demand.
The collective price increases by these major players demonstrate a coordinated response to the market conditions, signaling a novel era of pricing power for cloud providers. The speed of these adjustments – with Alibaba and Baidu announcing their increases within hours of each other – underscores the urgency and consensus surrounding the need to address rising costs.
Looking Ahead: Continued Price Pressure
The current price increases are expected to be sustained, with potential for further adjustments as demand continues to grow and supply chain constraints persist. The long-term implications of these changes remain to be seen, but the cost of AI computing power will continue to be a key factor shaping the future of the industry. Companies will need to carefully manage their computing budgets and explore strategies for optimizing resource utilization to remain competitive in this evolving landscape.
The situation also highlights the importance of domestic chip development. The success of Alibaba’s PanGu True Martial chip demonstrates China’s growing capabilities in this critical area, offering a potential pathway to reduce reliance on foreign suppliers and mitigate the impact of global supply chain disruptions. Continued investment in domestic chip technology will be crucial for ensuring the long-term competitiveness of China’s AI industry.
The next month will be critical as the announced price increases take effect, and the market begins to adjust to the new reality. Further announcements from other cloud providers and hardware manufacturers are anticipated, providing additional clarity on the direction of pricing trends. Industry observers will be closely monitoring the impact of these changes on AI development and deployment, as well as the broader economic landscape.
Key Takeaways:
- Alibaba Cloud and Baidu Intelligent Cloud have increased prices on AI computing resources by 5-34% and 5-30% respectively.
- Global cloud providers like AWS and Google Cloud have also recently raised prices, indicating a widespread trend.
- The surge in demand for AI, particularly driven by token usage, is the primary driver of these price increases.
- The price increases are expected to benefit cloud providers, IDCs, and suppliers of related infrastructure.
- Domestic chip development is becoming increasingly essential for mitigating supply chain risks and ensuring long-term competitiveness.
This evolving landscape demands careful attention from businesses and investors alike. We encourage readers to share their perspectives and insights in the comments below. Stay tuned to World Today Journal for continued coverage of this developing story.