Alibaba's Profit Slumps But AI Business Shines

“Alibaba Group's profit halved in the company's fiscal second quarter amid fierce competition in the food-delivery sector, but revenue growth was steady as its artificial-intelligence business gained momentum, with the consumer AI space the latest target in its sights.

 

The Hangzhou, China-based company said Tuesday that its net profit fell 53% to 20.99 billion yuan, equivalent to $2.96 billion. Adjusted net profit declined by an even sharper 72% to 10.35 billion yuan, a tad below market expectations.

 

Revenue rose about 5% to 247.795 billion yuan for the three months ended September, slightly higher than the consensus in a FactSet poll of analysts.

 

China's e-commerce players have invested heavily in the food-delivery sector in recent quarters, resorting to aggressive promotions to capture more market share. New entrant JD.com earlier this month reported a 55% drop in net profit for the latest quarter, while sector leader Meituan is expected to post continued operating losses in its food-delivery segment when it reports results later this week.

 

Alibaba's American depositary receipts declined 2.3% in Tuesday's trading.

 

For the second quarter, Alibaba's cloud business revenue climbed 34%, accelerating from the 26% increase in the previous quarter, driven by surging demand for AI services.

 

"We have entered into an investment phase to build long-term strategic value in AI technologies and infrastructure and a consumption platform integrating daily life services and e-commerce," Chief Executive Eddie Wu said.

 

On Monday, Alibaba said its Qwen app, a relaunched AI assistant positioned as a competitor to OpenAI's ChatGPT, reached 10 million downloads within a week of its public beta launch, emerging as a popular consumer AI tool in China. Alibaba aims to integrate the app with other consumer services in its ecosystem and grow it into a fully functioning AI agent.

 

The development is the latest sign that Alibaba, whose AI strategy has long focused on cloud computing, is also making headway in the consumer AI market, coming as capital spending on AI and cloud infrastructure reached around 120 billion yuan over the past four quarters.” [1]

 

1. Alibaba's Profit Slumps But AI Business Shines. Qin, Sherry; Qu, Tracy.  Wall Street Journal, Eastern edition; New York, N.Y.. 26 Nov 2025: B4.