Alibaba disclosed financial results for the June quarter that reflected significant pressures from elevated spending on artificial intelligence infrastructure. The company’s net income declined 75% during the period, while capital expenditure increased 75% to 67.7 billion Chinese yuan, equivalent to approximately $10 billion. The company attributed the capex surge to uneven timing of customer purchases, expansion of CPU-compute capacity, and elevated pricing across chip components.
Revenue performance showed modest gains, rising 9% to 268.95 billion Chinese yuan, marginally exceeding analyst expectations. The cloud division, viewed as central to the company’s AI monetization efforts, generated 48.4 billion yuan in revenue, representing a 45% year-on-year increase. CEO Eddie Wu highlighted that AI-related product revenue achieved triple-digit growth for the twelfth consecutive quarter, positioning the company competitively within the expanding artificial intelligence market.
Alibaba’s U.S.-listed shares declined 4.6% following the earnings announcement. Financial analysts at Citi noted concerns about the trajectory of capital expenditure and negative free cash flow of 44.7 billion yuan, suggesting potential questions regarding future capital requirements and return on investments. The elevated capex levels underscore the competitive pressures facing technology companies as they race to develop AI computing capabilities.
During the same period, Alibaba promoted its latest AI model, Qwen3.8-Max, which the company characterized as its most advanced offering. The model demonstrated performance metrics comparable to or exceeding Anthropic’s competing system. The company also released Qwen3.8-27B, designed for deployment on consumer-grade hardware, expanding the competitive landscape for AI model distribution across devices.
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