Alibaba’s latest earnings are in, and it’s a tale of two titans! While overall revenue edged up, it’s the massive surge in AI cloud computing that’s truly stealing the spotlight. Is this the definitive pivot that will reshape the tech giant’s future?
Alibaba Group Holdings Ltd. has unveiled its fiscal first-quarter results for the period ended June 30, 2025, painting a picture of strategic transition and resilient growth amidst a challenging economic landscape. The Chinese e-commerce titan reported a mixed performance, underscoring its vigorous investments in artificial intelligence and cloud computing, which are increasingly becoming the bedrock of its future expansion.
Revenue for the quarter reached 247.7 billion yuan ($34.6 billion), marking a 2% year-over-year increase. However, this figure slightly underperformed analysts’ expectations of approximately 252.9 billion yuan. Despite this top-line miss, the company spotlighted significant acceleration within its cloud unit, predominantly fueled by burgeoning demand for AI-related services, a key driver for its strategic pivots.
Adjusted earnings before interest, taxes, and amortization (EBITA) saw a 14% decline, settling at 38.8 billion yuan. This reduction reflects the substantial capital deployed into growth initiatives, particularly in cutting-edge AI cloud computing. Net income attributable to shareholders also experienced a modest 3% dip to 24.3 billion yuan, yet the market reacted positively, with Alibaba’s shares climbing as much as 3% on the New York Stock Exchange, reflecting investor optimism for long-term growth.
The Cloud Intelligence Group emerged as a standout performer, registering a revenue of 31.2 billion yuan, a robust 13% increase from the prior year. This impressive growth was primarily driven by intensified demand for AI infrastructure from both public and private sectors, positioning Alibaba’s cloud intelligence at the forefront of the industry. This trajectory aligns with the broader trend of Chinese tech firms aggressively expanding their AI capabilities to enhance global competitiveness.
In contrast, the core China commerce segment, encompassing the popular Taobao and Tmall platforms, demonstrated a 10% revenue increase when certain retail operations were excluded. However, overall group metrics indicated pressure stemming from aggressive discounting strategies and considerable investments in instant commerce platforms. Despite these pressures, the resilience of Chinese e-commerce in a sluggish consumer market was evident through underlying growth figures.
Free cash flow experienced a decline due to these extensive strategic investments, yet company executives maintained a bullish outlook. CFO Toby Xu confirmed plans to repurchase $15 billion in shares over the coming year, a clear signal of confidence in the undervalued stock and the company’s long-term prospects, even as it navigates regulatory scrutiny and macroeconomic uncertainties.
The international digital commerce arm, which includes prominent platforms like AliExpress and Lazada, reported a 12% growth, illustrating successful expansion efforts across Southeast Asia and Europe. While profitability in this segment remains elusive due largely to high marketing expenditures, the overarching strategy to integrate AI across retail and cloud services is expected to differentiate Alibaba within a fiercely competitive landscape.
Looking ahead, while specific guidance was not provided, Alibaba reiterated its unwavering commitment to AI and cloud as pivotal growth engines, projecting continued triple-digit increases in AI revenues. This optimistic forecast, however, is balanced by external factors such as potential U.S.-China trade tensions impacting chip supplies. Investor sentiment regarding e-commerce recovery and cloud momentum remains positive, underscoring the critical balance Alibaba must strike between aggressive investment and sustainable profitability, paving the way for a potential rebound if China’s economy stabilizes.
