Alibaba: Alibaba reported a steep 75% drop in quarterly profit for the period ending in June.
The Chinese tech giant blamed rising AI investment for the decline. The company disclosed the results on Thursday.
Capital Spending Jumps
Capital expenditure climbed 75% to 67.7 billion Chinese yuan, or roughly $10 billion. Alibaba pointed to several factors behind the increase.
Customer purchase timing played a role. CPU-compute capacity also expanded. Chip component prices rose across the board as well.
Revenue Beats Estimates
Total revenue grew 9% to 268.95 billion yuan. That figure edged past an LSEG estimate of 268.88 billion yuan.
The results reflect a broader trend across the tech sector. Companies are facing mounting costs for computing power and hardware as the AI race intensifies.
Alibaba reportedly raised prices for its AI computing and storage products by up to 34% in March. The company cited surging demand for the increase.
Shares Swing on Wall Street
Alibaba's U.S.-listed shares fluctuated Thursday. The stock initially dropped 4% in premarket trading. It later recovered some ground. Shares ended down 1.6%.
Cloud Division Powers Growth
Alibaba's cloud unit generated 48.4 billion yuan in revenue. That marks a 45% year-over-year increase.
Analysts view the cloud business as central to Alibaba's AI strategy. The division plays a role similar to Microsoft's or Google's cloud operations.
AI-related product revenue posted triple-digit growth for the twelfth straight quarter. CEO Eddie Wu highlighted the milestone in a Thursday statement.
He said the company's full-stack AI strategy positions Alibaba to capture growing demand for artificial intelligence and AI compute.
AI Model Race Intensifies
Alibaba operates across multiple tech sectors. Its footprint spans chips, cloud infrastructure and AI models.
Shares rallied earlier this month following the launch of Qwen3.8-Max. The company called it its most powerful AI model to date.
Alibaba presented data showing the model matched or outperformed Anthropic's Fable 5 on several benchmarks.
The company also released a new model this month built for consumer hardware. Qwen3.8-27B is designed to run on devices like laptops.
That marks a new front in AI model development. Alibaba said the model excels at coding, professional tasks, research and long-horizon agentic work.
Visual Disclaimer: This is an AI-generated illustrative portrait. It is used for creative representation and does not depict a real-time event. Created by AD News Live.
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