- Operating income tumbled 74% year-on-year due to higher spending on quick commerce expansion and AI infrastructure.
- Operating cash flow decreased by 49% to RMB 36 billion, and free cash flow decreased by 71%.
- Alibaba’s Cloud Intelligence unit grew revenue 36% YoY, supported by strong demand for AI-related products.
Alibaba Group Holding (BABA) said on Thursday that it has posted its tenth consecutive quarter of triple-digit growth in AI-related product revenue, making its Cloud Intelligence unit a primary growth engine.
“The rapid growth of AI + Cloud businesses in recent quarters gives us confidence to scale investments, further strengthening our full-stack AI capabilities.”
-Eddie Wu, CCEO, Alibaba Group
Profit Pressure Masks Revenue Growth
The group’s 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.
Cash generation weakened as well, with operating cash flow declined 49% to RMB36 billion and free cash flow dropping 71% to RMB39.02 billion.
Within its domestic e-commerce arm, Alibaba focused on expanding its quick commerce footprint. The company rebranded Ele.me as Taobao Instant Commerce and integrated the service into its Qwen app, aiming to strengthen ecosystem synergies.
Cloud And AI Drive Momentum
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.
The company continued to enhance its AI ecosystem, including the rollout of its Qwen3.5 model and expansion of its global cloud infrastructure. These advancements have strengthened its position in China’s cloud market and increased adoption across industries.
Alibaba stock traded over 4% lower in Thursday’s premarket.
Exchange Rate: 1CNY = 0.15USD
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