Alibaba reported a 66% year-over-year decline in net income for its fiscal quarter ending December 31, missing analyst expectations as investments in AI and infrastructure weighed on profitability. Revenue reached 284.8 billion yuan, below the 290.7 billion yuan forecast, while net income fell to 15.6 billion yuan from 46.4 billion yuan a year earlier.
The company attributed the decline to a 74% drop in operating income, driven by continued spending on technology, user experience, and rapid delivery services. U.S.-listed shares fell about 5% in premarket trading following the results.
Despite weaker overall performance, Alibaba’s cloud business showed strong growth. Cloud revenue rose 36% year over year to 43.3 billion yuan, supported by increasing demand for AI-related products, which recorded triple-digit growth for the tenth consecutive quarter.
CEO Eddie Wu emphasized AI as a core growth driver, as Alibaba continues to invest heavily in cloud infrastructure and new AI models. The company is positioning itself to compete more directly with U.S. firms in AI, expanding beyond its traditional e-commerce business.
