Alibaba Revenue Rises as Cloud and AI Businesses Expand
Alibaba Group reported a 3% increase in quarterly revenue, supported by strong performance in its cloud computing and artificial intelligence divisions.
Despite the growth, total revenue slightly missed Wall Street expectations as the company continues aggressively investing in AI infrastructure and cloud services.
Alibaba Plans to Increase AI Spending
The Chinese technology giant announced that it now expects to exceed its previously announced three-year AI investment commitment of 380 billion yuan.
While Alibaba did not reveal a revised spending target, management signaled that artificial intelligence remains one of the company’s top long-term priorities.
Shares of NYSE:BABA initially declined in U.S. premarket trading before rebounding sharply, rising around 6% shortly after markets opened.
Quarterly Revenue Slightly Misses Estimates
Alibaba reported quarterly revenue of 243.4 billion yuan for the period ending March 31, slightly below analyst expectations of 247.1 billion yuan.
However, excluding divested businesses including Sun Art and Intime, the company said revenue increased 11% on a comparable basis.
The stronger adjusted growth highlighted continued momentum across Alibaba’s core business operations.
Cloud Revenue and AI Products Deliver Strong Growth
Alibaba’s Cloud Intelligence Group posted one of the strongest performances during the quarter.
Revenue from the cloud division surged 38% year-over-year to 41.6 billion yuan, while growth from external customers accelerated to 40%.
The results slightly exceeded analyst expectations and reinforced Alibaba’s growing position in China’s expanding cloud computing market.
Meanwhile, AI-related product revenue climbed to 8.97 billion yuan, marking the eleventh consecutive quarter of triple-digit annual growth.
The company said rising demand for public cloud services and AI products was the primary driver behind the increase.
Profitability Pressured by Heavy Investments
Although revenue growth remained solid, Alibaba’s profitability weakened as the company increased spending on AI development, cloud infrastructure, and rapid delivery services.
The company’s quick commerce segment, which focuses on deliveries within 60 minutes, also continued to require substantial investment.
Adjusted earnings per American Depositary Share came in below analyst estimates, while group adjusted EBITA dropped 84% year-over-year to 5.1 billion yuan.
Alibaba Prioritizes Market Share Over Margins
During the company’s earnings call, CEO Eddie Wu emphasized that Alibaba’s primary objective remains long-term growth and market share expansion rather than short-term profitability.
Wu stated that the company aims to grow faster than the broader market in order to strengthen its leadership position.
He also noted that Alibaba Cloud’s profit margins are expected to improve over the next one to two quarters.
China E-Commerce Business Benefits From Government Support
China’s e-commerce sector received additional support during the quarter from government subsidy programs encouraging consumers to upgrade electronic products.
Alibaba’s domestic e-commerce business generated 122.22 billion yuan in revenue, surpassing analyst expectations of 119.85 billion yuan.
The stronger consumer activity provided another positive signal for China’s retail and online shopping markets.
Alibaba Approves Annual Cash Dividend
Alibaba’s board of directors also approved an annual cash dividend of $0.13125 per ordinary share, equivalent to $1.05 per American depositary share.
The dividend will be paid to shareholders on record as of June 11.
