Alibaba reported a steep decline in core profitability for the March quarter as heavy spending on artificial intelligence infrastructure and e-commerce expansion weighed on earnings.
The company’s adjusted EBITA fell 84% year over year to 5.1 billion yuan, reflecting rising investments in AI chips, cloud infrastructure, and rapid-delivery commerce services. Alibaba shares fell in premarket trading following the results.
Despite the profitability decline, Alibaba continued to highlight strong momentum in its AI business. Revenue from its cloud computing division rose 38% year over year to 41.6 billion yuan, with AI-related product revenue recording triple-digit growth for the eleventh consecutive quarter. Adjusted EBITA for the cloud segment climbed 57%.
Alibaba said AI-related revenue reached 9 billion yuan during the quarter. CEO Eddie Wu stated the company expects annualized recurring revenue from AI models and applications to exceed 30 billion yuan by the end of the year.
The company has been aggressively positioning itself as one of China’s leading AI infrastructure providers through its Qwen models, proprietary AI chips, and cloud services. Wu emphasized that Alibaba’s ability to deploy self-developed AI chips at scale provides strategic advantages in an environment of limited computing supply.
At the same time, Alibaba continues investing heavily in China’s highly competitive quick-commerce market, where major platforms are racing to provide near-instant deliveries. Revenue from these services grew 57% year over year, though margins in the China e-commerce division came under pressure.
