China's Cloud Market: An Unprecedented Price Surge Arrives!

The Chinese cloud computing industry is experiencing a rare pricing reversal. Following Tencent Cloud, Alibaba Cloud and Baidu Intelligent Cloud have also announced price increases, marking the beginning of a loosening in China’s 20-year “continuous price decline” trend in the cloud market. An unprecedented cycle of price hikes is now approaching.

On March 18th, Alibaba Cloud announced on its official website that due to a surge in global AI demand and supply chain price increases, prices for AI computing power, storage, and other products will be adjusted, with a maximum increase of 34%. Alibaba Cloud’s MaaS business, BaiLian, achieved its highest growth rate from January to March this year, as Alibaba Cloud shifts scarce AI computing resources toward token-related services.

On the same day, after the A-share market closed, Baidu Intelligent Cloud also issued a price adjustment notice, with AI computing power-related products increasing by approximately 5%-30%, and parallel file storage increasing by about 30%. The price hikes by two leading vendors within less than four hours highlight that the tight supply and demand for AI computing power are translating into direct price signals.

Earlier this week, Morgan Stanley reported that cloud computing has traditionally been a deflationary industry—larger scale means lower costs, and prices tend to fall. However, the AI era is breaking this paradigm. With explosive growth in token usage, an unprecedented cycle of price increases is brewing in China’s AI cloud market.

For investors: As reasoning workloads rapidly expand and upstream component and data center constraints push up marginal costs, the likelihood of cloud providers regaining pricing power increases.

Rare in history! Leading domestic cloud service providers collectively raise prices

Alibaba Cloud’s recent price adjustments cover AI computing power, storage, and other products, with increases up to 34%. The reasons cited include the explosion in global AI demand and supply chain price hikes. Insiders add that the rapid growth in token calls is changing internal resource allocation priorities, with Alibaba Cloud shifting more scarce computing power toward token-related services.

Baidu Intelligent Cloud’s price adjustments also target AI computing power and storage, with computing power products increasing by about 5%-30%, and parallel file storage rising approximately 30%. The fact that two top vendors raised prices on similar products on the same day indicates that “tight supply and demand” are moving from delivery and queuing cycles to more direct price signals.

Last week, Tencent Cloud announced a price increase, having optimized its billing strategies for some models on its AI development platform. For example, the input price for Tencent HY2.0 Instruct model was sharply increased from 0.0008 yuan per thousand tokens to 0.004505 yuan per thousand tokens, a rise of 463.13%.

Beyond BAT (Baidu, Alibaba, Tencent), other domestic cloud providers are also acting. Wangsu Technology announced a 35%-40% price increase for CDN products starting February 1, 2026. UCloud announced a price increase for all contract renewals and new customers starting March 1, 2026.

International vendors are also raising prices. On January 4, 2026, AWS increased the price of EC2 Machine Learning Capacity Blocks by about 15%. On January 27, 2026, Google Cloud announced significant price hikes for network, storage, and AI infrastructure, with some CDN and data transfer rates increasing by up to 100%. The new prices will take effect from May 2026.

Behind these hikes, token consumption is exploding

The acceleration of AI agent applications, represented by OpenClaw, is causing token consumption to surge geometrically compared to traditional conversational AI.

A previous UBS report pointed out that global AI model weekly token usage monitored via the API aggregation platform OpenRouter has reached approximately 16 trillion in recent weeks, nearly tripling the level before OpenClaw launched in January 2026.

Supply-side constraints stem from chips. Regarding storage chips, SK Group chairman stated at Nvidia GTC that systemic bottlenecks in chip production mean a global shortage of memory chips is likely to persist until 2030.

For AI chips, rental prices for H100/H200 have risen significantly, with delivery times extended to 2027. Meanwhile, new AI compute centers demand higher electricity supplies and liquid cooling systems, with construction and operational costs substantially higher than traditional data centers.

In a scenario of exploding demand and limited supply expansion, cloud infrastructure is more prone to an environment of “cost-driven inflation + supply-demand tension.”

20 years of “price decline” inertia loosening—an unprecedented price hike cycle?

Historically, cloud computing has been a deflationary industry—larger scale means lower costs, and prices tend to fall. However, Morgan Stanley points out that the AI era is breaking this paradigm. An unprecedented cycle of price increases is brewing, and China’s AI cloud pricing is set to enter its first upward cycle in 20 years.

Morgan Stanley analysts predicted in a March 16 report that the Chinese AI cloud market (GenAI-related IaaS + MaaS) will grow at a compound annual growth rate (CAGR) of 72% from 2024 to 2029, with the market size rising from RMB 15 billion in 2024 to RMB 218 billion in 2029.

The share of GenAI in China’s total IaaS + PaaS market will increase from 6% in 2024 to 39% in 2029, transforming AI cloud from a “peripheral player” to the core growth engine of cloud computing.

More attention is being paid to pricing elasticity on the profit side. Morgan Stanley estimates that, for example, Alibaba Cloud’s profit margin (EBITA) could increase by 1 percentage point for every 1% price increase, potentially raising EBITA forecasts by 11%. If overall contract prices increase by 10% (assuming 20% of contracts are renewed annually), EBITA margins could expand by 4 percentage points.

Risk warnings and disclaimers

Market risks exist; investment should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment is at their own risk.