Alibaba reports 9% rise in quarterly revenue, shares fall 6%

Alibaba grew its revenue 9% last quarter but shares still fell 6% after profit dropped 76% due to a surge in AI spending, the company reported Thursday.

Revenue for the quarter ending June 30 reached 268.95 billion yuan ($39.64 billion), up 9% from a year earlier. Net income fell to 10.54 billion yuan ($1.55 billion), equaling a 76% decline.

Non-GAAP net income after removal of share-based pay, investment swings and one-off items still dropped 38% to 20.72 billion yuan ($3.05 billion), while adjusted EBITA fell 30% to 27.33 billion yuan ($4.03 billion).

Capital spending jumped 75% to feed AI interests

Alibaba’s capital expenditures for Q2 hit 67.68 billion yuan ($9.98 billion), a 75% jump from the same period a year earlier, money the company tied to AI infrastructure.

The expenditure drained cash, as free cash flow swung to an outflow of 44.67 billion yuan ($6.58 billion), more than double the 18.82 billion yuan outflow a year earlier.

The unit housing Alibaba’s model work, its Qwen consumer app and the QwenWork enterprise agent, its AI Labs and Applications segment, ran an adjusted EBITA loss of 13.86 billion yuan ($2.04 billion). This loss was only 3.22 billion yuan one year ago. Alibaba blamed the higher numbers on higher inference costs from the Qwen app and deeper investment in its AI stack.

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