Alibaba Profit Collapses 84% as Cloud and AI Revenue Surge

CNBC reported Wednesday that Alibaba posted a dramatic collapse in underlying profitability for the March quarter, even as its cloud and artificial intelligence businesses delivered accelerating growth.

The Chinese technology group reported adjusted earnings before interest, taxes, and amortization of 5.1 billion yuan, roughly $751 million. That figure marked an 84% year-on-year decline. The metric strips out one-time items to reflect ongoing business performance.

Alibaba’s U.S.-listed shares initially rose in premarket trading before reversing. They fell as much as 4% before recovering to trade about 1.3% lower.

Heavy Spending Weighs on Alibaba Core Profit

The steep drop reflects sustained investment across several fronts. Alibaba has been pouring capital into semiconductors, data centers, and its proprietary family of AI models marketed under the Qwen brand. The company has also committed heavily to instant commerce, a rapid-delivery shopping service promising sub-one-hour fulfilment.

That quick-commerce push has become a competitive battleground among China’s largest e-commerce platforms. Adjusted EBITA in Alibaba’s China e-commerce division fell 40% year-on-year, despite overall domestic e-commerce revenue rising 6%. Quick-commerce revenue itself surged 57%, suggesting the investments are gaining traction even as they pressure near-term margins.

Cloud Emerges as the Clear Bright Spot

Against the profit squeeze, Alibaba’s cloud computing unit delivered standout results. Revenue for the segment climbed 38% year-on-year to 41.6 billion yuan, a faster pace than the prior quarter. Adjusted EBITA for the division jumped 57%.

Chief Financial Officer Toby Xu told investors that AI-related product revenue had now achieved triple-digit growth for eleven consecutive quarters. AI-specific revenue reached 9 billion yuan in the period.

Background: Alibaba’s AI Pivot

Alibaba began its structured AI push several years ago, positioning Qwen models as globally competitive alternatives in the large-language-model race. The Hangzhou-headquartered group has progressively embedded AI tools across its product ecosystem. This week the company announced a Qwen-powered shopping assistant for Taobao, its flagship domestic e-commerce application.

The results illustrate a tension familiar to investors in high-spending technology companies. Near-term profitability contracts sharply as capital flows toward infrastructure, while top-line growth metrics reward the strategy over time.

What Comes Next for Alibaba

Analysts will watch whether cloud growth sustains its acceleration through the June quarter. Quick-commerce spending is unlikely to ease soon given intensifying rivalry with domestic peers. Investors appear willing to absorb the margin pain for now, but continued EBITA compression may test that patience.

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