Published: May 13, 2026
Category: AI / Business / Cloud Computing
Alibaba reported a 3% increase in fourth-quarter revenue on Wednesday, but the company’s profits came under heavy pressure due to aggressive spending on artificial intelligence, cloud infrastructure, and its expanding instant retail business.
The Chinese tech giant said revenue for the quarter ending March 31 reached 243.38 billion yuan ($18 billion), slightly below analyst expectations of 247.22 billion yuan. Meanwhile, U.S.-listed Alibaba shares fell around 1% in premarket trading following the earnings release.
Alibaba’s Cloud Intelligence Group remained one of the company’s strongest-performing divisions, with revenue surging 38% year-over-year to 41.63 billion yuan ($6.13 billion). The growth reflects increasing demand for AI services and cloud infrastructure as businesses across China accelerate adoption of artificial intelligence technologies.
The company has been heavily investing in AI development, particularly through its Qwen chatbot platform. Alibaba recently upgraded Qwen to allow users to shop directly through conversational AI, enabling purchases from Taobao and Tmall marketplaces without manually browsing traditional product listings.
Earlier this year, Alibaba reorganized its AI operations by separating them from the cloud computing business and appointing CEO Eddie Wu to lead the newly formed “Alibaba Token Hub” division. The restructuring highlights the company’s ambitions to turn its expanding AI ecosystem into a major long-term revenue driver.
Alibaba previously stated it aims to generate more than $100 billion in combined external revenue from its AI and cloud businesses over the next five years. According to the company, AI-related services already account for roughly 30% of external customer revenue within its cloud division.
Despite the strong AI momentum, profitability declined sharply due to rising operational costs. Excluding one-time items, Alibaba’s quarterly net income dropped 99.7%, while adjusted EBITA fell 84%. The company attributed the steep decline largely to continued investment in technology infrastructure and its “quick commerce” operations.
Alibaba’s quick commerce segment — focused on deliveries within 60 minutes — has become an increasingly competitive battleground in China’s e-commerce market. Revenue from Alibaba’s China e-commerce business reached 122.22 billion yuan, beating analyst estimates and showing continued consumer demand despite intense competition.
However, Alibaba’s international e-commerce business underperformed during the quarter, contributing to the overall revenue miss.
Industry analysts say Alibaba’s latest results highlight the growing challenge facing global tech companies: balancing rapid AI expansion with profitability. While cloud computing and AI services are driving long-term growth opportunities, the infrastructure costs required to compete in the AI race continue to weigh heavily on short-term earnings.
Author. Adigun Adedoye.