Alibaba (BABA) Stock; Recovers as Cloud AI Profit Jumps 133% Despite Rising AI Losses

TLDRs;

• Alibaba’s AI Cloud profit surged 133%, highlighting rapidly improving economics across its growing artificial intelligence infrastructure business.
• BABA shares recovered after an early decline as investors focused on stronger cloud performance and accelerating AI demand.
• AI Labs losses jumped sharply as Alibaba continued spending heavily on frontier models, Qwen inference and consumer AI products.
• Alibaba’s massive AI investment program is raising cash-flow concerns despite management targeting profitability within the next three years.

Alibaba (NYSE: BABA) stock recovered after an early post-earnings decline as investors focused on strong cloud growth despite rising AI expenses.Alibaba’s AI Cloud and Compute business delivered a major improvement in the June 2026 quarter. Adjusted EBITA jumped 133% to RMB5.63 billion.

Cloud revenue also climbed 45% to RMB48.44 billion. Its adjusted EBITA margin expanded to about 12%, compared with roughly 7% a year earlier.

AI-driven product revenue reached RMB12.38 billion, representing about 26% of AI Cloud sales. Alibaba said the category has posted triple-digit growth for 12 straight quarters.

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