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The
Hong Kong- and U.S.-listed company, which started out in
e-commerce and online retail but is increasingly focused on AI
technologies, said that its profit for April-June was at 10.5
billion yuan ($1.6 billion), down from 43.1 billion yuan ($6.4
billion) the same quarter last year.
Quarterly revenue grew 9% to almost 269 billion yuan (nearly $40
billion), with revenue from its AI cloud and compute services up
45% to 48.4 billion yuan ($7.2 billion).
But capital expenditures, including investments in AI
infrastructure to meet customer demand, jumped 75% to 67.7
billion yuan (about $10 billion) during the quarter, weighing on
profits.
Alibaba attributed the significant increase in spendings to
factors including “fluctuations” in procurement cycles, increase
in CPU, or central processing unit, compute capacity in
anticipation of growing customer adoption of AI “agents” and
higher pricing of chip components.
“As we continue to ramp up our supply, our AI and Cloud revenue
growth will accelerate further in the coming quarters, alongside
continued improvement in profitability,” said Alibaba CEO Eddie
Wu in prepared remarks during an earnings conference.
Alibaba’s U.S.-traded shares fell more than 3% Thursday.
Alibaba, one of China’s biggest companies, said last year it
planned to invest at least 380 billion yuan (about $56 billion)
over three years in cloud computing and AI infrastructure.
It has been making advances with its flagship Qwen AI and has
launched “agentic” AI services for commercial customers. In
July, it previewed its Qwen3.8-Max AI model which the company
said was “second only” to Anthropic’s Claude Fable 5.
It has also pledged an ambitious goal of surpassing $100 billion
in terms of annual AI and cloud revenue within the next five
years.
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