Alibaba’s AI-Driven Growth Amid a Profit Squeeze

Alibaba reported adjusted EBITA of 5.1 billion yuan, an 84 % YoY decline. Adjusted earnings per American Depositary Share fell to 0.62 yuan, far below analysts’ consensus of 5.79 yuan. Total revenue reached 243.38 billion yuan, missing the LSEG estimate of 247.22 billion yuan. The company’s net-profit numbers differ across reports (see “Conflicting Profit Figures”).

Reuters

Revenue from the Cloud Intelligence Group rose 38 % YoY to 41.6 billion yuan (? $6.1 billion). AI-related products accounted for 30 % of external cloud revenue and are expected to exceed 50 % within a year. AI-related revenue totaled $1.32 billion and is projected to surpass $1.47 billion in the June quarter and $4.4 billion by year-end.

Reuters

CEO Eddie Wu emphasized that the return on AI, cloud, and e-commerce investments will become “extremely clear” within 3-5 years and that the firm will “maintain growth faster than the market average” while keeping margin secondary. CFO Toby Xu noted that strategic investments are already “translating into business growth.” Alibaba did not disclose a new AI-spending target but reaffirmed its intention to exceed the original 380 billion-yuan plan.

Alibaba shares surge nearly 8% as firm expects to exceed $55.96 billion AI spending target

Quick-commerce revenue jumped 57 % YoY, yet the segment remains costly; executives expect unit-economics to turn positive by FY 27. Analysts warn that profit quality is weak, margins are under pressure, and heavy AI spending could outpace customer uptake. Despite the profit miss, U.S.-listed shares rose 7-8 % after the earnings release, following a pre-market dip of up to 4 %.

Alibaba’s Earnings Test Is Whether AI Can Pay for the Delivery Fight

• Some sources report non-GAAP net income of 86 million yuan, a near-total collapse from 29.8 billion yuan a year earlier.

Reuters

• Other reports claim net profit rose 21 % YoY.

Alibaba’s Earnings Test Is Whether AI Can Pay for the Delivery Fight

• All sources agree on an 84 % YoY drop in adjusted EBITA.

CNBC

Alibaba projects AI-driven cloud revenue to become its primary growth engine within a year and targets > $100 billion in combined AI and cloud revenue over the next five years. The quick-commerce unit is slated to achieve positive unit economics by FY 27, and the company expects continued AI-related margin expansion in the coming quarters.

Reuters

• “We see the ROI (return on investment) on this investment in the next 3-to-5 years as being extremely clear,” — *Eddie Wu, CEO, Alibaba*

CNBC

• “The return on our investments in AI plus Cloud and (e-commerce business) are increasingly clear...our technology investments are beginning to pay off commercially,” — *Eddie Wu, CEO, Alibaba*

Alibaba shares surge nearly 8% as firm expects to exceed $55.96 billion AI spending target

• “We aim to maintain growth that is faster than the market average in order to gain larger market share and firmly cement our absolute market leadership position... those are the primary objectives, and margin is still secondary,” — *Eddie Wu, CEO, Alibaba*

Reuters

• “Our strategic investments continued to translate into business growth,” — *Toby Xu, CFO, Alibaba*

Alibaba's AI Boom Can't Mask Deep Profit Slump

• “Alibaba’s AI has moved beyond the initial investment phase and progressed commercialization at scale,” — *Jacob Cooke, CEO, WPIC Marketing + Technologies*

Associated Press

• “investment phase is far from over,” — *Chelsey Tam, Analyst, Morningstar*

Associated Press