Alibaba posted financial results for the June quarter that reflected the significant costs associated with artificial intelligence infrastructure expansion. The Chinese technology company’s net income fell 75% during the period, while capital expenditure climbed 75% to 67.7 billion Chinese yuan (equivalent to $10 billion). The company attributed the spending increase to uneven timing of customer purchases, expanded CPU-compute capacity, and elevated prices for various chip components.
Revenue performance remained relatively stable, rising 9% to 268.95 billion Chinese yuan, marginally exceeding analyst expectations of 268.88 billion yuan. The cloud division, which management views as central to monetizing AI applications, generated 48.4 billion yuan in revenue and expanded 45% year-on-year. In a statement accompanying the results, Chief Executive Eddie Wu highlighted that AI-related product revenue achieved double-digit growth rates for the twelfth consecutive quarter in a row.
Analysts at Citi noted that the detailed reporting on Alibaba’s AI Labs and Applications segment offered improved transparency regarding investment levels and product development progress. However, they cautioned that the combination of capital expenditure rising 75% and negative free cash flow of 44.7 billion yuan might prompt investor scrutiny regarding capital requirements and the returns generated from such investments.
Abbaba’s U.S.-listed shares declined 4.6% following the market opening on the day results were released. Earlier this month, the company had unveiled new AI models, including what it characterized as its most advanced offering, Qwen3.8-Max, which delivered performance metrics comparable to or exceeding competitor offerings. The company also released Qwen3.8-27B, an AI model designed to operate on consumer devices such as laptops.
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