7 December 2023

General Overview

Alibaba Group Holding Ltd. has abruptly cancelled the spinoff of its cloud business due to heightened U.S. restrictions on advanced chips for China, leaving investors stunned. The e-commerce giant characterized the move as a “reset,” abandoning the plan to split off its cloud services division and hold an IPO. Instead, Alibaba will attempt to foster organic growth in the unit and instead distribute an inaugural annual dividend of $2.5 billion to shareholders. 

The decision comes amid escalating competition in the cloud services sector, compounded by U.S. limitations on AI chips crucial for data centres and high-end computing. The Biden administration’s efforts to restrict China’s access to cutting-edge chips it fears may be used for military purposes are now unexpectedly impacting the private sector. This development also jeopardizes Alibaba’s earlier-announced strategy to divide into six main units, with most slated for eventual public offerings.¹

Speaking of chips, in a deepening of their existing partnership, artificial intelligence startup Anthropic is set to be among the pioneers of Google’s latest chips, the Cloud TPU v5e. Anthropic plans to deploy these advanced chips to enhance the capabilities of its large language model, Claude, which relies on extensive cloud computational power for training AI interfaces. 

This collaboration follows a recent cloud computing agreement between the two companies. Anthropic committed over $3 billion to Google’s cloud computing services over four years and received a $2 billion investment from Google. Having utilized Google Cloud services since its founding in 2021, Anthropic will leverage more of its infrastructure under the new agreement and take advantage of enhanced security features.²

Company Specific Updates

Salesforce Inc

In late November, Salesforce revealed its 2023 Cyber Week insights, drawn from data on over 1.5 billion shoppers on the Salesforce Customer 360 platform, including 29 of the top 30 U.S. online retailers. Global sales during Cyber Week rose by 6% YoY, totalling $298 billion, with U.S. sales reaching $70.8 billion, a 5% increase from last year. This growth was propelled by increased order volume, indicating a surge in consumer demand for the first time in over five quarters, driven by a preference for value and convenience rather than by inflation. 

Source: Salesforce
Source: https://sforce.co/46QMp3k

AI significantly enhanced online sales growth this Cyber Week, contributing to $51 billion in global online sales through features like targeted offers and product recommendations. Automation, including chatbots, saw a 79% YoY increase and Salesforce facilitated over 49 billion AI-powered product recommendations, underscoring the impact of technology in shaping the Cyber Week shopping experience.³ 

Also in November, Salesforce reported total revenue of $8.72 billion for Q3, marking an 11% YoY increase. Subscription and support revenues reached $8.14 billion (up 13% YoY), while professional services and other revenues saw a 4% YoY decrease.⁴

Microsoft Corp

In a $1 billion five-year deal, Amazon will switch to Microsoft’s cloud-based productivity suite, Microsoft 365 (M365). This commitment encompasses over 1.5 million licenses across various tiers of M365. A leaked internal Microsoft document reveals Amazon’s transition from an on-premises version of Microsoft Office to the cloud-based iteration of these productivity tools.

Source: https://bit.ly/3NgQ4AP
Image Credit: Microsoft

Beginning in November, Amazon’s implementation includes 550,000 seats of Microsoft’s M365 E5 product for corporate employees and 1 million seats of M365 F5 for frontline staff, including fulfillment center workers. This significant investment underscores Amazon’s strategic shift towards cloud-based solutions for its workforce, even if that means partnering with a rival like Microsoft.⁵ 

Investing in Cloud Computing with DATA ETF

If you’re interested in investing in a cloud computing ETF, consider the Evolve Cloud Computing Index Fund (DATA ETF), Canada’s first cloud computing ETF. DATA ETF invests primarily in equity securities of companies located domestically or internationally that have business operations in the field of cloud computing. To learn more about DATA ETF, please click here: https://evolveetfs.com/data/. 

Portfolio Strategy and Activity

For the month, Salesforce Inc made the largest contribution to the Fund, followed by SAP SE and ServiceNow Inc. The largest detractors to performance for the month were VMware Inc, followed by Paycom Software Inc and Fortinet Inc. 



  1. Zhang, J., “Alibaba Tumbles After Nixing Cloud Spinoff on US Chip Curbs,” Bloomberg, November 16, 2023; https://www.bloomberg.com/news/articles/2023-11-16/alibaba-calls-off-cloud-spinoff-in-major-blow-to-overhaul-effort
  2. Love, J. & Day, M,. “AI Startup Anthropic to Use Google Chips in Expanded Partnership,” Bloomberg, November 8, 2023; https://www.bloomberg.com/news/articles/2023-11-08/ai-startup-anthropic-to-use-google-chips-in-expanded-partnership
  3. “Salesforce Data Reveals Record-Breaking Cyber Week: $298B in Global Digital Sales, $51B in AI-Influenced Purchases,” Salesforce, November 28, 2023; https://investor.salesforce.com/press-releases/press-release-details/2023/Salesforce-Data-Reveals-Record-Breaking-Cyber-Week-298B-in-Global-Digital-Sales-51B-in-AI-Influenced-Purchases/default.aspx
  4. “Salesforce Announces Strong Third Quarter Fiscal 2024 Results,” Salesforce, November 29, 2023; https://investor.salesforce.com/press-releases/press-release-details/2023/Salesforce-Announces-Strong-Third-Quarter-Fiscal-2024-Results/default.aspx
  5. Stewart, A., “Amazon’s $1 billion cloud deal with Microsoft includes 550,000 licenses for corporate employees and 1 million for warehouse workers,” Business Insider, November 2, 2023; https://www.businessinsider.com/amazon-m365-cloud-deal-with-microsoft-new-details-2023-11
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Tags ai chips  alibaba group holding ltd  Amazon  amazon web services  aws  cloud  cloud business spinoff  Cloud Computing  Cloud Services  cloud services competition  data etf  Fortinet  u.s. restrictions on advanced chips