TLDR
- Alibaba’s cloud division revenue grew 34% year-over-year to 39.8 billion yuan, exceeding forecasts
- Company’s AI products posted triple-digit growth for the ninth consecutive quarter
- Overall quarterly revenue of 247.8 billion yuan beat Wall Street projections
- Alibaba deployed 120 billion yuan toward AI and cloud infrastructure in the past year
- New Qwen chatbot app crossed 10 million downloads within one week of release
Alibaba posted second-quarter earnings that topped analyst expectations. The cloud computing segment delivered the strongest results.
The company reported revenue of 247.8 billion yuan ($34.8 billion) for the quarter ended September 30. Analysts had projected 242.65 billion yuan. Revenue increased 5% compared to the same period last year.
Shares rose 4% in premarket U.S. trading. The gains extended as regular trading began on Tuesday.
Alibaba Group Holding Limited, BABA
Cloud intelligence revenue reached 39.82 billion yuan. That figure surpassed estimates of 37.9 billion yuan by a comfortable margin.
The 34% growth rate marked a sharp acceleration. The previous quarter saw cloud revenue expand 26%. This represents the third straight quarter of faster growth in the division.
AI Spending Delivers Results
CEO Eddie Wu attributed the cloud performance to artificial intelligence investments. “Robust AI demand further accelerated our Cloud Intelligence Group business,” Wu stated.
Products powered by AI technology posted triple-digit year-over-year growth. This streak has now lasted nine consecutive quarters.
The cloud unit’s profitability improved alongside revenue growth. Earnings before interest, taxes, and amortization jumped 35% to 3.6 billion yuan.
Alibaba has committed massive resources to AI development. The company spent approximately 120 billion yuan on AI and cloud infrastructure over the past four quarters.
CFO Toby Xu said Alibaba is channeling profits and free cash flow back into growth investments. He noted that AI revenue from external customers represents an expanding share of the cloud business.
The company announced a 380 billion yuan ($53 billion) three-year AI investment plan in February. Additional spending commitments followed in September for AI models and infrastructure.
New Apps Gain Market Share
Alibaba launched the Qwen AI chatbot app on November 18. The application competes directly with ChatGPT in China. Downloads surpassed 10 million within the first seven days.
The app runs on Alibaba’s own AI models. The company has established itself as a leading AI player in the Chinese market.
Instant commerce offerings are also expanding rapidly. These services promise delivery within one hour on select items.
CEO Wu said quick commerce continued scaling with improved unit economics. The service drove growth in monthly active consumers across Alibaba’s shopping apps.
Profitability Pressured by Investments
Intense spending on fast delivery services has impacted margins. Alibaba faces stiff competition from rivals offering similar quick commerce options.
A government program allowing appliance trade-ins provided a sales boost. The initiative permits consumers to exchange older items for new ones. This program expires at the end of December.
Adjusted earnings per American depositary receipt totaled 4.36 yuan. Bloomberg analysts had expected 6.34 yuan.
Near-term profitability will continue fluctuating as the company prioritizes growth investments. CFO Xu emphasized Alibaba is building for long-term success rather than maximizing short-term earnings.
Alibaba has deployed 120 billion yuan toward AI and cloud infrastructure over the past year as triple-digit AI product growth continues for the ninth straight quarter.
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