Alibaba Group Holding has launched its first cloud computing region in South America, bringing two data centres online in São Paulo. The move extends the company's cloud infrastructure into Latin America's largest economy and follows the opening of an Alibaba Cloud region in Mexico in February last year.

The São Paulo facilities give Brazilian businesses, startups, developers and public institutions access to a range of cloud services hosted within the country, including computing, storage, networking, databases and big data tools. Alibaba said the infrastructure was built to support workloads that require low latency, resilience and stronger control over where data is processed and stored, a consideration for companies operating under Brazilian data protection rules.

The company also plans to introduce a set of agent-based artificial intelligence services in the region. These include tools for running AI agents in secure environments, automating data pipelines through natural language commands and managing network operations. Alibaba has struck a partnership with Insi, a Brazilian technology provider, which will use the new infrastructure to serve corporate clients undergoing digital modernisation.

With the Brazil launch, Alibaba Cloud now operates 106 availability zones across 31 regions worldwide, according to the company. Allen Guo, general manager for the Latin America region, described Brazil as one of the world's most dynamic digital economies and central to the company's expansion plans in the region.

Alibaba enters a market already served by established cloud providers. Amazon Web Services, Microsoft Azure, Google Cloud and Oracle all operate cloud regions in Brazil, and both Microsoft and Amazon have committed billions of dollars to infrastructure there in recent years. Brazil accounts for more than half of the data centre projects tracked across South America, Central America and the Caribbean, drawing on government incentives and the country's renewable energy capacity.

The Brazil launch comes as Alibaba increases spending on cloud and artificial intelligence infrastructure more broadly. The company raised HK$80 billion, equivalent to roughly $10.2 billion, through a share placement completed in late August. Alibaba said all of the proceeds would go towards its AI capabilities, including data centre expansion and chip procurement. The placement was priced at a discount to the prior closing price and represented close to 3.7 per cent of the company's existing share capital.

The fundraising followed a sharp rise in capital expenditure. Spending in the quarter to the end of June rose 75 per cent year on year to 67.7 billion yuan, driven by data centre construction and higher costs for computing chips. Cloud and AI revenue grew 45 per cent over the same period. Alibaba's free cash flow turned negative in the quarter, as spending on infrastructure outpaced income from the cloud business. The company has pledged to invest at least 380 billion yuan, around $56.5 billion, in cloud and AI infrastructure over three years, and executives said in August that roughly half of that amount had already been spent.

Alibaba's total debt stood at 2.29 times adjusted EBITDA as of the end of March, roughly double the ratio recorded a year earlier, reflecting the scale of borrowing alongside the equity raise. The company has also scaled back share buybacks in recent months.

Analysts covering the sector have noted that expansion into new markets such as Brazil adds to an already heavy capital burden at a time when margins across Alibaba's cloud business remain under pressure. The company has set a longer-term target of reaching $100 billion in external cloud revenue by 2030, with margins potentially exceeding 20 per cent, but reaching that scale will depend on how quickly new regions such as São Paulo attract paying customers. Brazilian enterprises weighing the new option will also need to consider that Chinese law requires companies such as Alibaba to cooperate with state intelligence requests regardless of where their servers are located, a factor some analysts say sets it apart from Western competitors operating in the same market.

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