Alibaba Posts Weaker Earnings Amid Heavy AI Investments

By Tracy Qu

Alibaba's earnings slumped in its fiscal first quarter as the Chinese e-commerce titan continued to invest heavily in artificial intelligence, racing to preserve its lead in the AI sector.

The Hangzhou-based company said Thursday that net profit dropped 76% to 10.54 billion yuan, equivalent to $1.57 billion, while revenue grew about 8.6% from a year earlier to 268.95 billion yuan.

Profit was lower than expectations while revenue came ahead of estimates.

"We delivered a strong quarter, driven by the improving commercialization of our full-stack AI capabilities," said Eddie Wu, chief executive of Alibaba Group.

Alibaba Cloud's external revenue growth accelerated to 45%, with AI-related product revenue delivering triple-digit growth for the 12th straight quarter, Wu said.

The results come at a pivotal time for Alibaba, which has been sharpening its focus on AI. The company has continued to upgrade its AI model series and integrate it into its core ecosystem. It rolled out the Qwen3.8-Max recently, one of the largest open-source models globally.

Citi noted an "accelerating AI race" in China, as AI model developers are speeding up the release of ever more powerful models.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

August 20, 2026 06:10 ET (10:10 GMT)