Alibaba Quarterly Profit Drops 75% as AI Investment Spending Grows
AI-related cloud revenue rose 45% as capital spending jumped 75%, while net income fell 75% and free cash flow turned sharply negative, Alibaba said.
- On Thursday, Alibaba reported a 9% rise in quarterly revenue, driven by strong AI demand fueling its cloud business, though adjusted profit missed estimates due to heavy capital expenditure.
- Capital expenditure surged 75% to 67.68 billion yuan as the firm prioritized AI infrastructure, driving a 45% revenue increase in AI cloud and compute services to $7.21 billion.
- Quarterly revenue reached nearly 269 billion yuan, bolstered by the extended "618" shopping festival, while net profit plunged 76% to 10.5 billion yuan reflecting strategic investments and domestic economic pressure.
- Alibaba CEO Eddie Wu highlighted "improving commercialization of our full-stack AI capabilities" as a key driver, with the firm earlier creating the "Alibaba Token Hub" group to accelerate AI profitability.
- Facing pressure from a persistent consumer slump, the Hangzhou-based giant sharpens its AI focus while affiliate Ant Group reported 1% profit growth pivoting toward agentic AI commerce and digital health.
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The Alibaba Group, Chinese giant focused on electronic commerce, had adjusted net profit of US$ 3.05 billion (20.72 billion yuan) in the second quarter of 2026, fell by 38% compared to the same period last year, the company reported.
Associated Press News
Alibaba quarterly profit drops 75% as AI investment spending grows
China's Alibaba reports a 75% drop in profit for the latest quarter from the year before to roughly $1.6 billion as it invests heavily in AI infrastructure.
Alibaba's AI spending cost it three quarters of its profit
Alibaba’s net profit fell 75% in the June quarter, to $1.54bn. The cause was not a weak business. It was the bill for building one. Capital spending reached $9.98bn in three months, up 75% on the same quarter last year, according to the results announcement. In the same accounts, the cloud unit that spending pays […] This story continues at The Next Web
Alibaba posts AI-fuelled revenue bump
Tech giant Alibaba saw increased revenue in its most recent quarter, boosted by the global AI frenzy driving demand for its products. In results posted to the Hong Kong Stock Exchange, the company's revenue in the quarter, which ended June 30, was nearly 269 billion yuan, up nine percent year-on-year. The Hangzhou-based firm has been ploughing tens of billions of dollars into AI, with its shareholders eager to see how it will monetise the huge …
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