- BABA -0.73%
Alibaba Group Holding, China's e-commerce and cloud computing giant, on Tuesday reported a better-than-expected 5 per cent increase in revenue for the September quarter, as its cloud and artificial intelligence businesses continued to gain momentum.
Total revenue for the Hangzhou-based company reached 247.8 billion yuan (US$34.8 billion) for its financial second quarter ended September 30, beating the consensus estimate of 245.2 billion yuan by Bloomberg-polled analysts. That was more than the 2 per cent growth rate in the previous quarter.
Net income attributable to ordinary shareholders fell 52 per cent to 21 billion yuan from 43.9 billion yuan a year ago, primarily due to the decrease in income from operations. That was still better than the 9.2 billion yuan estimate by analysts.
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"We have entered into an investment phase to build long-term strategic value in AI technologies and infrastructure and a consumption platform integrating daily life services and e-commerce," said Alibaba CEO Eddie Wu Yongming.
In his post-earnings call with analysts on Tuesday, Wu said the strong demand for AI could lead Alibaba to boost investment in AI infrastructure. Earlier this year, the company committed US$52 billion capital spending for computing resources and AI infrastructure - China's largest-ever computing project financed by a single private business.
As "the pace at which we can add new servers is insufficient to keep up with the growth in customer orders", the company will not rule out scaling up capital expenditure, he added.
The latest quarterly results of Alibaba, owner of the South China Morning Post, showed that its heightened efforts in the cloud, AI and e-commerce markets are paying off.
Wu said Alibaba does not "see much of an issue about the so-called AI bubble" being speculated over the next two to three years, as AI infrastructure resources - from processors to memory chips used in data centres - would continue to be undersupplied over that period.
Alibaba Group Holding CEO Eddie Wu Yongming delivers a speech at the opening ceremony of the World Internet Conference Wuzhen Summit on November 7, 2025. Photo: Reuters alt=Alibaba Group Holding CEO Eddie Wu Yongming delivers a speech at the opening ceremony of the World Internet Conference Wuzhen Summit on November 7, 2025. Photo: Reuters>
Story ContinuesThe company deployed about 120 billion yuan in capital expenditure towards AI and cloud infrastructure over the past 12 months, according to Toby Xu, Alibaba's chief financial officer.
"We are re-investing our profits and free cash flow for the future, while near-term profitability is expected to fluctuate," Xu said.
According to Alibaba, its AI-related product revenue continued to show strong momentum, delivering "another quarter of triple-digit year-over-year growth" as its cloud unit's revenue surged 34 per cent.
The Hong Kong-listed shares of Alibaba gained 2.14 per cent to close at HK$157.80 ahead of its earnings release.
In pre-market trading in New York, Alibaba's US-listed shares were up 4 per cent after its latest quarterly financial results were published.
Alibaba's adjusted Ebita - earnings before interest, taxes and amortisation, an alternative measure of a company's financial health - decreased 78 per cent year on year to 9 billion yuan in the quarter, missing analysts' 14.2 billion yuan estimate.
The company's AI and cloud services unit, Alibaba Cloud, posted 34 per cent revenue growth to 39.8 billion yuan in the three months to September, which marked the fourth consecutive quarter that the unit posted double-digit growth.
Overall, AI-related product revenue remained strong, posting triple-digit growth for the ninth consecutive quarter.
Alibaba Cloud is the artificial intelligence and cloud computing services unit of Alibaba Group Holding. Photo: Shutterstock alt=Alibaba Cloud is the artificial intelligence and cloud computing services unit of Alibaba Group Holding. Photo: Shutterstock>
Alibaba Cloud has also emerged as one of China's major AI developers, along with start-ups DeepSeek and Moonshot AI, as it doubled down on creating advanced open-source systems under its Qwen family of AI models.
The company recently made its most significant foray into the consumer AI market via its multipurpose Qwen chatbot, which generated more than 10 million downloads in its first week of public beta release.
In its core e-commerce operation, Alibaba's Taobao and Tmall Group has invested heavily in the segment known as instant commerce - a turbocharged combination of on-demand online shopping and swift dispatch that delivers orders within an hour. Main domestic competitors are Meituan and JD.com.
Alibaba recently touted solid results at the conclusion of this year's extended Singles' Day shopping festival. Taobao Shangou, Alibaba's instant commerce vehicle, recorded more than 100 million orders on the back of new users acquired during the first three weeks of the festival.
People walk by an advertisement billboard promoting Taobao and Tmall Group's Singles' Day promotion in Beijing on November 10, 2025. Photo: AP alt=People walk by an advertisement billboard promoting Taobao and Tmall Group's Singles' Day promotion in Beijing on November 10, 2025. Photo: AP>
Alibaba China E-commerce Group, the company's domestic e-commerce business, saw its revenue grow 16 per cent from a year ago to 132.6 billion yuan.
Since October, losses per order for Taobao Shangou have halved compared with the July and August period, when competition in this market segment was at its peak, according to Jiang Fan, head of Alibaba's E-commerce Business Group.
The order structure has continued to improve, as non-beverage categories accounted for more than 75 per cent of orders, while the average value of orders recorded double-digit growth from August. As volumes scale, logistics costs per order have also fallen sharply, Jiang added.
"We firmly believe that the quick commerce model holds immense potential for synergy with the broader Alibaba ecosystem," Jiang said, noting that the business has completed its initial phase of rapid scale-up and unit-economics optimisation and is now moving into a new stage focused on improving the user experience via upgraded operations.
According to Alibaba, September marked the peak investment period for Taobao Shangou and that spending would pull back substantially in the current quarter.
Alibaba International Digital Commerce Group, representing the company's overseas e-commerce business, saw revenue jump 10 per cent to 34.8 billion yuan in the September quarter. This unit also reported an adjusted Ebita of 162 million yuan to mark its first quarterly profit.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.
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