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Alibaba Profit Falls 66% as Cloud and AI Surge; Shares Slide on Earnings Shock

Heavy AI spending compressed margins, prompting the selloff.

Overview

  • December‑quarter revenue rose 2% to 284.8 billion yuan but missed estimates, while net income dropped to 15.6 billion yuan as operating income fell 74% and adjusted EBITA declined 57%.
  • Cloud Intelligence Group revenue climbed 36% year over year, with AI‑related product sales posting triple‑digit growth for the tenth straight quarter and Qwen’s consumer interface surpassing 300 million monthly users.
  • Management set a five‑year goal to generate more than $100 billion in AI and cloud revenue alongside a previously pledged 380 billion‑yuan multiyear investment in infrastructure.
  • Alibaba consolidated AI offerings into a new Token Hub unit, launched the Wukong enterprise agent platform, and raised prices 5%–34% for T‑Head chips and 30% for cloud parallel file storage.
  • Shares fell as much as 7% after hours following the results, while leadership churn in the Qwen team—including the March departure of division head Lin Junyang—remained an execution risk.