Alibaba (BABA) shares surged nearly 9% after the Chinese e-commerce giant posted stronger-than-expected quarterly profit, even as revenue narrowly missed Wall Street forecasts.
Net income for the fiscal first quarter came in at $5.9 billion, well above the $3.7 billion analysts expected. Revenue totaled $34.6 billion, slightly below estimates of $35 billion, reflecting pressures from China’s fierce e-commerce price war.
Operating income slipped 3% to about $4.9 billion, while overall adjusted EBITA declined 14% year over year to 38.8 billion yuan. Despite those weaker margins, investors responded positively to growth in strategic areas such as artificial intelligence and cloud computing, helping push the stock higher to $130.20 in early U.S. trading.
AI and Cloud Provide a Growth Engine
Alibaba’s results highlighted how the company is leaning on AI and cloud technology to offset challenges in its core commerce business. Revenue from the Cloud Intelligence Group rose 26% year over year to 33.4 billion yuan ($4.7 billion), accelerating from 18% growth in the prior quarter. AI-related product sales delivered triple-digit percentage gains for the eighth straight quarter, underscoring Alibaba’s position as a frontrunner in China’s AI race.
Momentum in these segments has reassured investors that Alibaba’s diversification efforts are paying off. The company also unveiled a new homegrown AI chip designed for inference tasks, a move aimed at reducing dependence on U.S. chipmaker Nvidia (NVDA) amid ongoing export restrictions. While Chinese technology still lags Nvidia in advanced training capabilities, Alibaba’s chip push marks a strategic step toward building a self-sufficient AI supply chain.
Commerce Faces Headwinds, Quick Commerce Expands
Alibaba’s main e-commerce division, which generates more than half of total revenue, grew 10% to $19.6 billion. Customer management revenue — fees merchants pay for marketing and related services — also climbed 10%. However, profits in the division fell 21% to $5.4 billion, as the company continues heavy investments in “instant retail,” which aims to deliver goods within an hour of purchase.
The quick commerce arm reported revenue of 14.8 billion yuan ($2 billion), up 12% from a year earlier. Management emphasized that user growth on Taobao rose 20% thanks to these initiatives, which are beginning to achieve scale despite losses from the ongoing three-way price war with JD.com (JD) and Meituan. That battle has already cut into industry profits, with JD reporting its profit halved and Meituan warning of major losses this year.
Conclusion
Alibaba’s latest results reveal a company balancing short-term pain from cutthroat competition with long-term opportunity in AI and cloud. While revenue growth remains modest at just 2% this quarter, the surge in AI-driven sales and a stronger cloud business have lifted investor sentiment. With shares up more than 40% year to date, Alibaba’s ability to expand its AI and international operations could help sustain momentum, even as the e-commerce battleground continues to pressure margins.
Alibaba’s latest results reveal a company balancing short-term pain from cutthroat competition with long-term opportunity in AI and cloud. While revenue growth remains modest at just 2% this quarter, the surge in AI-driven sales and a stronger cloud business have lifted investor sentiment. With shares up more than 40% year to date, Alibaba’s ability to expand its AI and international operations could help sustain momentum, even as the e-commerce battleground continues to pressure margins.
Considering a $1,000 investment in these companies?
Our team at Stock Investor carefully curated a list of top stocks with the potential for significant returns, suitable for beginners and seasoned investors alike who are eager to learn a trade and unearth the best stocks to buy. Though not featured in this article, these selected stocks could be game-changers in the future.For those seeking dynamic trading experiences, consider joining our Swing Trade Alerts, Option Income Alert, or our Trading Room. Take advantage of our special offer today, starting at just $1 in the first month.
Unlock the secrets of Smart Money
Explore how billionaires and institutions are influencing the market. Follow their every move with DarkOption Flow and stay updated on essential market insights. Begin your journey to informed investing today!
Education
And if you're a fan of Invest opedia, you'll appreciate what we offer at SharperTrades even more. Explore our comprehensive option trading course and technical trading course, where you can learn trading, analyze stocks, delve into chart patterns for stocks, and gain invaluable insights for making the best company investments.
Unlock Your Stock Market Edge with SharperTrades. Dive into powerful trading tools, learn a trade, and receive expert guidance. Stay up-to-date with regular market updates. Learn trading, basics of investing, and how to pick the best stocks to buy. Whether you're a beginner or seasoned investor and trader, we've got you covered. Get started for free, today!