Alibaba revenue rises 9% as profit falls amid higher AI spending

In short: Alibaba’s revenue grew in its latest quarter, but profit dropped sharply as the company spent more on AI and saw swings in the value of its investments.

What happened

Alibaba said revenue in its fiscal first quarter rose 9% from a year earlier to 268.95 billion yuan.

Net income, a basic measure of profit, fell 76% to 10.54 billion yuan. The company pointed to two main reasons, heavy spending on AI and changes in the value of its investments.

Alibaba also reported a “non-GAAP” net income number, which removes investment gains and losses to show more of the day-to-day business (like checking your monthly paycheck without counting ups and downs in your stock account). That figure fell 38% to 20.72 billion yuan.

Alibaba’s capital expenditures, money it spends on long-term projects and equipment, climbed 75% to 67.68 billion yuan. The company said it is investing in AI infrastructure, meaning the data centers and computing power needed to run and train AI systems (like building more power plants and roads before more cars can drive).

Within its AI-related results, Alibaba said its AI Labs and Applications segment had a wider adjusted EBITA loss. At the same time, AI Cloud and Compute Services revenue grew 45%.

Why it matters

Big tech companies often accept lower profits in the short term when they are building expensive foundations for future products. For regular people, this can affect how quickly AI features show up in everyday online services, and how much companies may eventually charge for them. It also shows that strong sales growth does not always mean higher profit, especially when investment values and spending swing from quarter to quarter.

Source: NYTimes