Alibaba shares fall after sharp decline in core profitability

Alibaba Group reported a sharp fall in core profitability for the March quarter as the company continued investing heavily in artificial intelligence, cloud computing and e-commerce expansion.

The Chinese technology giant said adjusted earnings before interest, taxes and amortization fell 84 percent year-on-year to around $750.9 million.

ALibaba’s US-listed shares initially rose in premarket trading before turning lower, falling by as much as 4 per cent.

Despite weaker profitability, the company reported strong growth in its AI and cloud businesses. Revenue in Alibaba’s cloud computing division rose 38 percwnt year-on-year to 41.6 billion yuan, while adjusted profits for the segment jumped 57 percent.

Chief financial officer Toby Xu said: “Our strategic investments continued to translate into business growth. Cloud Intelligence Group’s revenue continued to accelerate, with AI-related product revenue achieving triple-digit growth for the eleventh consecutive quarter.”

Alibaba said AI-related revenue reached 9 billion yuan during the quarter.

Chief executive Eddie Wu said the company expects annual recurring revenue from AI models and applications to exceed 30 billion yuan by the end of the year.

Alibaba has also expanded AI integration across its platforms, including launching a new Qwen-powered shopping assistant for Taobao users.