Alibaba profit falls amid heavy AI, e-commerce spending

Alibaba said on Wednesday that its core profitability declined sharply in the March quarter as the company continued to pour significant investments into technology and e-commerce initiatives, News.Az reports, citing CNBC.

The Chinese technology giant reported adjusted earnings before interest, taxes, and amortization (EBITA) — a key measure of underlying profitability — of 5.1 billion Chinese yuan ($750.9 million).

This financial indicator excludes one-time gains or losses in order to provide a clearer picture of the company’s core business performance.

Alibaba’s U.S.-listed shares initially rose during premarket trading before reversing course.

The stock was last down 3.4%.

The company has been investing aggressively in artificial intelligence semiconductors, data centers, and the expansion of its own family of AI models under the Qwen brand. Those efforts have contributed positively to Alibaba’s cloud computing division.

Although cloud computing has emerged as a strong area for Alibaba, fueled by growing AI demand in China, investors remain concerned about the company’s ongoing spending on so-called quick or instant commerce services. These platforms allow users to receive goods within less than an hour and have become a major competitive arena among China’s leading e-commerce companies.

Adjusted EBITA in Alibaba’s China e-commerce division fell 40% year-on-year during the March quarter due to those investments, despite customer management revenue — the company’s largest revenue source — increasing by 1%.

At the same time, Alibaba has been recording rapid growth from its investments, with revenue from quick commerce services surging 57% year-on-year.

News.Az 

By Nijat Babayev