Alibaba's AI Investment in E-commerce Breaks Even, Signaling Positive ROI in Retail Tech

Alibaba says its AI spending in e-commerce is already breaking even

SHANGHAI -- Chinese tech giant Alibaba is already recouping its investment on artificial intelligence in the company's e-commerce business, vice president Kaifu Zhang told reporters on Thursday. The Chinese tech giant has bet big that AI will generate returns despite market concerns that companies are spending too much on the technology with little to show for it. Alibaba last month announced it will increase its spending on AI and cloud infrastructure, after pledging in February it would spend 380 billion yuan ($53 billion) over the next three years on the tech. Zhang oversees e-commerce AI applications at Alibaba. Earlier in the day, he shared how the company has rolled out a range of AI tools, from making search results more personalized to improving the accuracy of virtual clothing try-ons. The presentation comes a day after Alibaba began presales for Singles Day, China's biggest shopping event of the year that's akin to Black Friday. Zhang said preliminary testing has showed consistent results from AI, including a 12% increase in returns on advertising spend. "It's very rare to see double-digit changes" in such tests, he said in Mandarin, translated by CNBC. Zhang predicted that thanks to AI integration, there would be a "very significant" positive impact on Alibaba's gross merchandise volume during this year's Singles Day shopping period, which centers on Nov. 11. Alibaba's China e-commerce unit remains the tech giant's largest source of revenue, with growth of 10% year-on-year in the quarter ended June 30 to the equivalent of $19.53 billion. Despite lackluster Chinese consumer spending in the last few years, during the Singles Day period last year, research firm Syntun estimated 20.1% year-on-year growth in sales to 1.11 trillion yuan for Alibaba's Tmall, JD.com and PDD. The company on a late August earnings call cast AI and consumption as "two major historic opportunities" that require Alibaba to make investments of "historic scale." "Our first priority at this point is making these investments," CFO Toby Xu said at the time. "So for now, we may place relatively less emphasis on profit margins. But that does not mean that we don't care about margins."

Alibaba Says It Has Broken Even on AI Spending in Retail Operations | PYMNTS.com

The announcement follows months of industry skepticism about whether AI spending could yield direct financial returns. Alibaba's break-even milestone offers one of the first quantifiable examples from a global retailer that AI can produce operating gains, not just cost efficiencies. The company has not released detailed cost metrics, and some observers question whether break-even status can hold through seasonal demand swings. Alibaba said the benefits so far include improved user retention and more efficient ad allocation, but the sustainability of those gains will depend on broader consumer trends. Alibaba's efforts parallel how U.S. peers are embedding AI across retail functions. Walmart has begun piloting "AI super agents" to automate store operations and checkout, while also launching an AI-first shopping experience through ChatGPT that lets customers purchase products directly within chat. PYMNTS reported that major U.S. and European chains are using AI to optimize inventory and demand forecasting, improving on-shelf availability and lowering logistics costs as supply chains remain tight and labor expenses rise. Target, for example, has invested in predictive analytics to better align merchandising with regional demand, while grocers and fashion brands are leveraging AI to adjust pricing dynamically in response to shifting consumer behavior. Alibaba's ongoing AI ramp-up, which PYMNTS reported is part of its effort to pursue artificial general intelligence (AGI) goals, underscores how major platforms are linking automation with core profitability metrics. As global retailers balance AI spending with financial discipline, Alibaba's break-even milestone could reset how CFOs measure success. Since March, triple the number of enterprise CFOs report very positive ROI from gen AI, according to PYMNTS Intelligence.