Alibaba quarterly revenue rises on cloud demand

Source Credit : Portfolio Prints

Alibaba on Wednesday said its core profitability tumbled in the March quarter as the company ramped up spending on artificial intelligence, cloud infrastructure, and China’s increasingly competitive e-commerce market.

The Chinese technology giant reported adjusted earnings before interest, taxes, and amortization (EBITA) of 5.1 billion yuan ($750.9 million), marking an 84% year-on-year decline. Adjusted EBITA is closely watched by investors because it strips out one-off gains and losses to reflect the performance of a company’s core operations.

Alibaba’s U.S.-listed shares initially rose in premarket trading before reversing course. The stock fell as much as 4% before trimming losses to trade down roughly 1.3%.

The sharp decline in profitability comes as Alibaba continues to pour billions into AI semiconductors, data centers, and the expansion of its in-house Qwen family of large language models. Those investments are beginning to generate momentum in the company’s cloud computing business, which has emerged as one of Alibaba’s strongest growth engines.

While the cloud division has benefited from surging AI demand in China, investors remain focused on Alibaba’s escalating spending in so-called “instant commerce” — a fast-growing delivery model promising goods within an hour. The segment has become a major battleground among China’s e-commerce giants as companies compete aggressively for consumers seeking ultra-fast delivery.

Adjusted EBITA in Alibaba’s China commerce segment fell 40% year-on-year during the March quarter, reflecting the cost of those investments, even as customer management revenue — the company’s largest source of income — edged up 1%.

Despite the pressure on margins, Alibaba said the strategy is delivering rapid growth. Revenue from its instant commerce business surged 57% year-on-year, helping overall China commerce revenue rise 6% during the quarter.

The company’s cloud computing division delivered particularly strong results. Revenue climbed 38% year-on-year to 41.6 billion yuan in the March quarter, accelerating from the prior quarter’s growth pace, while adjusted EBITA for the segment jumped 57%.

“Our strategic investments continued to translate into business growth. Cloud Intelligence Group’s revenue continued to accelerate, with AI-related product revenue achieving triple-digit growth for the eleventh consecutive quarter,” Alibaba CFO Toby Xu said in a statement.

Alibaba added that AI-related revenue reached 9 billion yuan during the quarter.

The Hangzhou-based company has positioned itself as one of China’s leading AI players, developing its own AI chips while expanding cloud-based AI services. Its Qwen models are increasingly viewed as among the strongest-performing Chinese AI systems globally.

Alibaba is also embedding AI across its broader ecosystem. Earlier this week, the company announced plans to introduce a Qwen-powered AI shopping assistant within Taobao, its flagship e-commerce platform in China.