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Alibaba quarterly profit drops 75% as AI investment spending grows
ABC News - Breaking News, Latest News and Videos • • business
Key Points:
- Alibaba reported a 75% drop in quarterly profit to 10.5 billion yuan ($1.6 billion) due to heavy investments in AI infrastructure, despite a 9% increase in overall revenue to nearly 269 billion yuan ($40 billion).
- Revenue from Alibaba’s AI cloud and compute services surged 45% to 48.4 billion yuan ($7.2 billion), reflecting growing customer demand for AI-related offerings.
- Capital expenditures rose 75% to 67.7 billion yuan ($10 billion), driven by increased procurement, higher CPU compute capacity, and rising chip component costs, which weighed heavily on profits.
- Alibaba plans to continue expanding its AI and cloud services, expecting accelerated revenue growth and improved profitability in upcoming quarters, according to CEO Eddie Wu.
- The company is advancing its AI capabilities with its Qwen AI models and recently previewed Qwen3.8-Max, positioning it as a strong competitor in the AI sector; however, its U.S.-listed shares fell over 3% following the earnings report.
