Alibaba's Profit Plunges 75% as $10 Billion AI Spending Surge Powers 45% Cloud Revenue Growth
24 Sources
[1]
Alibaba Cloud plans to use fewer Western chips, to boost its already huge AI margins
Alibaba has revealed margins from its cloudy AI operation are rising so quickly it will be able to achieve return on investment for new hardware purchases faster than previously planned. Speaking on the company's earnings call yesterday, CFO Toby Xu said the company runs its servers for five
[2]
Alibaba quarterly profit drops 75% as AI investment spending grows
HONG KONG (AP) -- China's technology giant Alibaba on Thursday reported a 75% drop in profit for the latest quarter as it invested big in artificial intelligence infrastructure, even as revenue coming from its AI-related services gained 45%. The Hong Kong- and U.S.-listed company, which started
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Alibaba cloud revenue rises 45% even as AI spending weighs on profit
* U.S. listed shares fell 4% in premarket trading. In this article * BABA Follow your favorite stocksCREATE FREE ACCOUNT China's Alibaba posted stronger growth in its key cloud division in the June quarter, as rising demand for its AI products boosted results. That came even as net income
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Alibaba's AI spending cost it three quarters of its profit
Alibaba's AI spending reached $9.98bn in a single quarter, and net profit fell 75% to $1.54bn. The cloud division that money pays for grew 45% and lifted its own segment profit 133%. A provision for a €550m EU fine is sitting in the same accounts, unmentioned. Alibaba's net profit fell 75% in the
[5]
Alibaba Q1 2026 earnings: profit drops 76% on AI spending
Capital expenditures reached 67.68 billion yuan ($9.98 billion) in the quarter, a 75% increase from the same period a year earlier, reflecting spending on AI infrastructure. Free cash flow was an outflow of 44.67 billion yuan ($6.58 billion), compared with an outflow of 18.82 billion yuan in the
[6]
Alibaba's Revenue Jumps 9% as AI Cloud Growth Hits 45% -- But a Profit Plunge Sends Shares Lower
Capital expenditure jumped 75% to 67.7 billion yuan ($10 billion), pushing free cash flow to a $6.6 billion outflow; U.S.-listed shares fell as much as 5% before paring the drop to roughly 3.5%. Chinese tech titan Alibaba reported fiscal first-quarter revenue of 268.95 billion yuan, roughly $40
[7]
Alibaba accelerates AI growth by increasing use of self-developed chips
Alibaba released its fiscal first-quarter 2027 results on August 20, 2026, revealing a significant restructuring aimed at enhancing its operations around artificial intelligence and cloud computing. This strategic shift consolidates its China e-commerce group, international digital commerce group,
[8]
Alibaba Quarterly Profit Drops 75% as AI Investment Spending Grows
HONG KONG (AP) -- China's technology giant Alibaba on Thursday reported a 75% drop in profit for the latest quarter as it invested big in artificial intelligence infrastructure, even as revenue coming from its AI-related services gained 45%. The Hong Kong- and U.S.-listed company, which started
[9]
Alibaba Earnings: Can AI bets power the next growth wave? - Alibaba's AI Story Faces a Big Earnings Test
Alibaba Earnings: Can AI bets power the next growth wave? 1/8 Alibaba's AI Story Faces a Big Earnings Test Alibaba heads into a closely watched earnings report on August 20, with investors looking for evidence that its aggressive push into artificial intelligence is translating into sustainable
[10]
Alibaba Stock Flashes a Bearish Pattern as a $10 Billion Risk Looms - Alibaba Gr Hldgs (NYSE:BABA)
Alibaba (NYSE:BABA) stock plunged by over 5% on Friday after the Chinese AI and e-commerce giant released its latest earnings. Its New York-listed ADR fell to $117.96, its lowest level since July 31. The retreat could extend further, with the stock now flashing a bearish chart pattern and the
[11]
AIibaba Focuses on Agentic Commerce as AI Spending Balloons | PYMNTS.com
The Chinese tech giant shared quarterly earnings results Thursday (Aug. 20) that showed revenue up 9% for the year, while its AI investments drove a 75% decline in net income. External revenue from Alibaba's cloud business was up 45%, while AI-related product revenue saw triple-digit growth for
[12]
These Analysts Revise Their Forecasts On Alibaba After Q1 Earnings - Alibaba Gr Hldgs (NYSE:BABA)
Alibaba Group Holding Ltd. (NYSE:BABA) reported mixed results for its first quarter on Thursday. Alibaba reported fiscal first-quarter 2027 revenue of $39.64 billion, up 9% year over year and above the $38.63 billion analyst estimate. However, adjusted earnings per ADS fell 42% to $1.26, missing
[13]
Alibaba Stock Falls 7% on Profit Miss, but Analyst Stays Bullish on AI Cloud - Alibaba Gr Hldgs (NYSE:BAB
Alibaba Group Holding Limited (NYSE:BABA) stock slid almost 7% on Friday as investors digested heavier AI spending and profit pressure, even with the Consumer Discretionary sector up 0.81% and the S&P 500 higher by 0.43%. Alibaba is leaning harder into AI and cloud as its next growth engine, but
[14]
Alibaba's quarterly revenue up 9%, misses adjusted profit due to heavy AI spend
China's Alibaba reported a 9 per cent rise in quarterly revenue on Thursday, as strong AI demand fueled growth in its cloud business, but missed estimates for adjusted profit due to heavy capital expenditure. As businesses deploy AI, demand for the cloud computing power needed to train and run
[15]
Baird cuts Alibaba stock price target on margin pressure from AI investments By Investing.com
Investing.com - Baird lowered its price target on Alibaba Group Holding Ltd. (NYSE:BABA) to $160 from $164 on Thursday while maintaining an Outperform rating on the shares. The new target still implies substantial upside, with the broader analyst consensus pointing to 46% potential gains.
[16]
Alibaba AI Now Drives 35% of Cloud Revenue - Alibaba Gr Hldgs (NYSE:BABA)
For all the excitement around artificial intelligence, investors have had surprisingly little visibility into one key question: how much revenue is AI actually generating? Alibaba Group Holding Ltd. (NYSE:BABA) (OTC:BABAF) offered one of the clearest answers yet during its fiscal first quarter
[17]
Alibaba shares fall after 75% profit plunge as AI spending weighs on earnings By Investing.com
Investing.com -- Alibaba (HK:9988) shares fell about 3% on Friday after the company reported a 75% drop in quarterly net profit, with investors focusing on the cost of its accelerated AI investment even as cloud growth strengthened sharply. Shares fell to around HK$125, underperforming the broader
[18]
Alibaba goes all-out in AI race
Yesterday, alongside the release of its H1 results, CEO Eddie Wu reiterated his goal of reaching $100bn in revenue in its cloud and AI segment by the end of the decade, versus $7bn today. That captures the Chinese group's ambition, which has been undergoing a deep restructuring of its businesses
[19]
Why Is Alibaba Stock Falling Thursday? - Alibaba Gr Hldgs (NYSE:BABA)
Alibaba Group Holding Ltd. (NYSE:BABA) is leaning more heavily on artificial intelligence and cloud computing to drive its next phase of growth. However, heavy technology spending, weaker e-commerce performance and subdued consumer demand in China are weighing on profits and cash flow. Revenue
[20]
Alibaba's 45% Cloud Growth Fails to Offset a 76% Profit Drop
Alibaba trades at $125.47, down $3.43 or 2.66%, after opening down as much as 5% from Wednesday's $128.90 close. The stock went into the print at $128.76 with the options market pricing a roughly 6% earnings move against a six-quarter average realized move of 7.6%. The company delivered the single
[21]
Alibaba Earnings Weaken Amid Heavy AI Investments -- Update
Alibaba's earnings slumped in its fiscal first quarter as the Chinese e-commerce titan continued to invest heavily in artificial intelligence, racing to preserve its lead in the fast-growing sector. The results come at a pivotal time for Alibaba, which has been sharpening its focus on AI. The
[22]
Alibaba Earnings Preview: AI Model Downloads Surge, Passing Meta, Google - Alibaba Gr Hldgs (NYSE:BABA)
Alibaba Group (NYSE:BABA) stock has rebounded in the past two months, moving from the June low of $92 to $123 today. This rally will be put to the test this week when it releases its quarterly earnings. Alibaba Earnings Come as AI Growth Continues The upcoming BABA earnings come at a time when it
[23]
Alibaba stock dips as Q2 profit misses estimates despite strong AI cloud growth By Investing.com
Investing.com -- Alibaba shares dipped around 4% in U.S. premarket trading Thursday after the Chinese e-commerce and cloud giant reported second-quarter earnings well below analyst expectations. The company reported second-quarter earnings per share of RMB8.52, missing the analyst estimate of
[24]
Alibaba Posts Weaker Earnings Amid Heavy AI Investments
Alibaba's earnings slumped in its fiscal first quarter as the Chinese e-commerce titan continued to invest heavily in artificial intelligence, racing to preserve its lead in the AI sector. The Hangzhou-based company said Thursday that net profit dropped 76% to 10.54 billion yuan, equivalent to
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Alibaba reported a 75% drop in quarterly profit to $1.54 billion as AI infrastructure investments reached $9.98 billion. Despite the profit hit, the company's cloud revenue grew 45% year-over-year to $7.14 billion, driven by surging demand for AI products and the company's strategic shift toward self-developed chips.
Alibaba Bets Big on AI Infrastructure Despite Steep Profit Decline
Alibaba's quarterly earnings reveal a company making an aggressive push into artificial intelligence at the expense of short-term profitability. Net income plummeted 75% to $1.54 billion in the April-June quarter, driven primarily by AI spending that reached $9.98 billion—a 75% increase from the same period last year
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. The massive capital expenditures transformed free cash flow into a $6.58 billion outflow, compared to a $2.77 billion outflow the previous year4
. Quarterly revenue grew 9% to nearly $40 billion, with Alibaba cloud revenue rising to $7.14 billion—the division's fastest growth in 22 quarters3
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Source: Benzinga
AI-Driven Cloud Revenue Delivers Triple-Digit Growth
The AI Cloud and Compute Services division posted remarkable performance, with AI-related product revenue hitting $1.82 billion and achieving triple-digit growth for the twelfth consecutive quarter
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. The cloud segment's adjusted EBITA reached $830 million, surging 133% year-over-year, with CFO Toby Xu reporting an EBITA margin of 12%4
. Alibaba Cloud now commands a 38.1% share of China's AI cloud market according to research firm Omdia4
. CEO Eddie Wu stated that AI has become Alibaba's "most certain growth engine," projecting annualized revenue from AI products to approach $10 billion this quarter, up from about $7.3 billion in April-June4
.Strategic Shift Toward Self-Developed Chips to Boost Margins
Alibaba is accelerating its transition away from Western chips to improve profitability and competitiveness. "Self-developed chips are a long-term and important direction for us," Wu explained, noting that over 650 external customers now use cloudy resources running Alibaba's own chips—though this pales compared to AWS's 120,000 Graviton chip customers
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. The company runs servers for five years, with AI servers covering their costs within three years, generating free cash flow in years four and five. Alibaba aims to shorten the payback period to 2.5 years through rising margins from AI infrastructure investments and increased use of proprietary chips1
. Wu noted that machines acquired in 2018 and 2020 with Nvidia V100 and A100 accelerators "are still being used by customers at near full capacity"1
.AI Infrastructure Investments Drive Capital Expenditure Surge
Alibaba attributed the significant increase in capital expenditures to three key factors: fluctuations in procurement cycles, increased CPU-compute capacity in anticipation of growing customer adoption of AI agents, and higher pricing of chip components
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. The company has cut delivery time for hyperscale AI data centers to 100 days, which Wu described as "a world-leading pace that will significantly speed up our global compute infrastructure buildup"1
. This aggressive buildout reflects Alibaba's 2025 pledge to invest at least 380 billion yuan (about $56 billion) over three years in cloud computing and AI infrastructure2
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Source: Benzinga
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AI Labs Segment Faces Mounting Losses Amid Model Development
The newly restructured AI Labs and Applications segment—housing model development, the Qwen consumer app, and QwenWork enterprise agent—generated $492 million in revenue, up 16%, but posted an adjusted EBITA loss of $2.04 billion compared to a $475 million loss a year earlier
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. Alibaba attributed the widening loss to increased AI investment and higher inference costs tied to running the Qwen app5
. In July, the company previewed its Qwen3.8-Max AI model, claiming it was "second only" to Anthropic's Claude Fable 52
. Bloomberg Intelligence analysts Robert Lea and Jasmine Lyu warned that AI will "continue to depress, not enhance, returns" at China's leading AI companies, projecting Alibaba's AI business will generate cash losses for the next three years4
.E-Commerce Stagnates While Cloud Takes Center Stage
Alibaba's transformation from e-commerce giant to AI-focused enterprise is evident in the numbers. E-commerce revenue grew just 4% year-over-year to $30.34 billion, a stark contrast to the 45% surge in AI-driven cloud revenue
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. This shift is particularly notable given that Alibaba started as an e-commerce company and Beijing views it as a key vehicle for selling Chinese exports globally1
. General and administrative expenses jumped to 4.7% of revenue from 3.0%, partly due to a provision for the European Commission's €550 million Digital Services Act fine against AliExpress—the largest DSA action to date4
. Geopolitical headwinds continue to challenge international expansion, with several Western governments banning or discouraging public sector use of Alibaba Cloud, and Europe's push for sovereign clouds likely deterring adoption1
. Alibaba's U.S.-traded shares fell 4-5% following the earnings announcement3
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Source: The Register
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