HONG KONG – Alibaba posted a steep 75% decline in quarterly profit Thursday, as the Chinese technology powerhouse poured heavily into artificial intelligence infrastructure while demand for its AI-linked services continued to climb.
The company, listed in both Hong Kong and the United States, reported profit of 10.5 billion yuan ($1.6 billion) for the April-June period, sharply lower than the 43.1 billion yuan ($6.4 billion) it earned in the same quarter a year earlier. Alibaba began as an e-commerce and online retail giant, but it has increasingly shifted its focus toward cloud computing and AI technologies.
Revenue for the quarter rose 9% to nearly 269 billion yuan, or close to $40 billion. A key bright spot was Alibaba’s AI cloud and computing business, where revenue surged 45% to 48.4 billion yuan ($7.2 billion).
Still, the cost of building out that growth was substantial. Capital expenditures, which included major spending on AI infrastructure to keep pace with customer demand, rose 75% to 67.7 billion yuan, or about $10 billion, cutting into overall earnings.
Alibaba said the sharp increase in spending reflected several pressures, including “fluctuations” in procurement cycles, expanded CPU — or central processing unit — compute capacity ahead of wider customer adoption of AI “agents,” and higher prices for 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,” Alibaba CEO Eddie Wu said in prepared comments during the company’s earnings conference.
Investors reacted cautiously to the results, with Alibaba’s U.S.-listed shares falling more than 3% on Thursday.
Alibaba, among China’s largest companies, announced last year that it planned to spend at least 380 billion yuan, or about $56 billion, over three years on cloud computing and artificial intelligence 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.
