Alibaba made a significant shift in capital allocation during the June 2026 quarter, reducing share repurchases substantially while redirecting cash toward artificial intelligence infrastructure development. The company repurchased 13.4 million ordinary shares for US$162 million, compared with 56 million ordinary shares for US$815 million in the same quarter a year prior, representing approximately an 80% reduction in American Depositary Share buybacks. The company maintained US$19.3 billion in remaining repurchase authorization as of June 30, 2025.
Capital expenditures for AI infrastructure increased 75% year-over-year to RMB 67,678 million. The newly disclosed AI Labs and Applications segment recorded an adjusted EBITA loss of RMB 13,861 million, compared with RMB 3,224 million in the prior year period. Free cash flow declined to negative RMB 44,670 million from negative RMB 18,815 million year-over-year. To support the infrastructure buildout, Alibaba raised approximately US$3.2 billion in convertible notes and HK$12 billion in exchangeable bonds during fiscal 2026, with total debt to adjusted EBITDA reaching 2.29x. Full-year repurchases for fiscal 2026 totaled US$1.046 billion.
CEO Eddie Wu described AI as the company’s “most certain growth engine” during analyst discussions on August 20. Chief Financial Officer Toby Xu stated that AI and cloud investments demonstrated “a clear path to attractive ROIC,” with management projecting that AI hardware typically reaches break-even within three years on a five-year useful life. Management indicated that AI compute supply is expected to remain constrained industry-wide until at least 2030.
On the revenue side, AI Cloud and Compute Services revenue grew 45%, while AI-related product revenue posted triple-digit growth for the twelfth consecutive quarter. Cloud external growth reached a 22-quarter high, and Model-as-a-Service annual run rate surpassed RMB 16 billion as of August, tracking toward a year-end target exceeding RMB 30 billion. Stock performance showed shares closing at $130.53 on August 20, up 1.26% that day and 6.88% over the preceding week, though down 10.09% year-to-date.
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