Alibaba’s AI Business Hits 10 Quarters Of Triple-Digit Growth – So Why Are Investors Seeing Red?

Alibaba Group Holding (BABA) reported mixed financial results for the third quarter (Q3), as modest revenue growth contrasted with a steep decline in profitability, driven largely by aggressive investments in emerging business areas like Artificial Intelligence. 

Total revenue reached RMB284.8 billion ($40.7 billion), a 2% year-over-year increase with an adjusted earnings per ADS (EPS) of RMB7.09, both missing the analysts’ consensus estimates of RMB289.72 billion and RMB10.94, respectively, according to FiscalAI data. 

Operating income plunged sharply, down 74% YoY, driven primarily by lower adjusted earnings and higher spending on quick commerce, user experience initiatives, and AI infrastructure. 

However, Alibaba’s Cloud Intelligence unit emerged as a bright spot, delivering revenue growth of 36% YoY. Demand for AI-related products fueled this expansion, marking the tenth consecutive quarter of triple-digit growth in that segment.

Alibaba stock traded over 4% lower in Thursday’s premarket. 

Exchange Rate: 1CNY = 0.15USD

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