New Delhi — Alibaba Group Holding reported a sharp decline in profit as the Chinese e-commerce giant increased spending on artificial intelligence and computing infrastructure while its core online retail business faced weaker consumer demand.
The company reported a 9% increase in revenue, broadly in line with market expectations, supported in part by strong demand for computing capacity from its cloud business. Net income, however, fell more than 75% to 10.5 billion yuan, or about $1.6 billion.
Alibaba also recorded a free cash outflow of more than $6.6 billion, highlighting the financial impact of its aggressive investments in AI projects and infrastructure.
The company’s U.S.-listed shares fell about 4% in premarket trading following the results.
Alibaba has become one of China’s leading AI companies, with its Qwen family of models attracting international attention. The company has committed tens of billions of dollars to AI infrastructure, including chips, data centers and the development of AI agents, as it seeks to compete with major U.S. technology firms such as OpenAI and Anthropic.
The expansion of Alibaba’s AI operations is putting pressure on margins at a time when consumer spending in China remains subdued. Its traditional e-commerce business continues to face a difficult environment, increasing the importance of cloud computing and AI as future sources of growth.
Under Chief Executive Officer Eddie Wu, Alibaba has accelerated its shift toward AI. The company has consolidated most of its AI research and product teams under Alibaba Token Hub, a new business unit directly overseen by Wu.
Alibaba has also been selling non-core assets as part of a broader restructuring, including the disposal of its gaming unit Lingxi Games earlier this month.
The company has become one of China’s biggest corporate spenders on AI infrastructure, with Wu signaling that Alibaba is prepared to prioritize long-term expansion over near-term profitability.
Its AI investment is expected to exceed a previously announced 380 billion yuan three-year spending plan. Alibaba is also targeting a fivefold increase in cloud and AI revenue to $100 billion over five years. (Source: IANS)
