Alibaba prioritizes AI and cloud growth over profits

Alibaba’s AI and cloud revenues surged, but core profitability fell 84% due to heavy investments. Quick commerce grew 57%. Shares dropped up to 4% despite the AI focus.

Alibaba reported mixed results for the March 2026 quarter. The company achieved robust growth in artificial intelligence and cloud computing, with AI product revenues reaching RMB 8.97 billion and Cloud Intelligence revenues rising 38% to RMB 41.63 billion. Despite these gains, core profitability plunged 84% year-over-year, with adjusted EBITA at RMB 5.1 billion (USD $750.9 million). This decline was driven by heavy investments in AI, digital commerce, semiconductors, and ultrafast delivery. Quick commerce revenue grew 57%, but profitability in China commerce dropped 40%. Management defended the high spending, expecting clear benefits in the coming years. The market reacted cautiously, and Alibaba shares fell as much as 4% in pre-market trading. The company plans to continue increasing AI investment, targeting related revenues to exceed RMB 30 billion this year.