Alibaba Reports 5% Revenue Growth Driven by AI and Cloud Surge
Alibaba Group Holding has posted a 5 percent increase in quarterly revenue, fueled by accelerating demand for its artificial intelligence tools and cloud computing services, signaling a robust rebound in China’s tech sector amid economic headwinds.
The e-commerce giant reported 240.5 billion yuan ($33.6 billion) in revenue for the quarter ended September 30, topping analyst expectations of 235.1 billion yuan. Net income attributable to shareholders jumped 59 percent to 25.8 billion yuan, reflecting cost efficiencies and a surge in high-margin segments. Cloud intelligence revenue, Alibaba’s fastest-growing unit, climbed 13 percent to 30.4 billion yuan, with AI-related products contributing over half of that growth.
This performance underscores Alibaba’s strategic pivot toward AI infrastructure, where it has invested heavily in large language models like Qwen and data center expansions. The company’s public cloud market share in China holds steady at around 37 percent, per Canalys data, but AI workloads are propelling double-digit gains. International digital commerce revenue soared 35 percent, driven by platforms like Lazada and AliExpress, which now serve 300 million active users outside China.
CEO Eddie Wu attributed the results to ‘strong execution’ in AI productization, including the launch of Tongyi Qianwen models integrated into enterprise workflows. These tools are processing billions of daily queries, from code generation to customer service automation, helping clients cut development times by up to 50 percent. Alibaba’s AI bet pays off as global hyperscalers like AWS and Azure grapple with similar demand spikes, but in China, regulatory tailwinds—following a 2024 antitrust truce—allow freer experimentation.
The earnings lift sent Alibaba’s U.S.-listed shares up 6 percent in after-hours trading, extending a rally that has seen the stock gain 25 percent year-to-date. Hong Kong shares, which closed higher during the session, added another 4 percent. Investors cheered the guidance for continued cloud momentum, with management forecasting AI revenues to double in the coming fiscal year through partnerships with Huawei and Baidu.
Yet challenges persist. Domestic e-commerce core revenue grew just 4 percent, squeezed by deflationary pressures and competition from Pinduoduo’s low-price model. Taobao and Tmall, Alibaba’s flagship platforms, face user growth stagnation at 1 billion monthly actives, prompting a revamp with AI-powered personalization that boosts conversion rates by 20 percent. Geopolitical tensions loom large too; U.S. export controls on advanced chips have forced Alibaba to lean on domestic suppliers like SMIC, whose 7-nanometer yields lag behind TSMC’s.
Broader implications ripple across Asia’s tech landscape. Tencent and ByteDance are ramping similar AI-cloud hybrids, but Alibaba’s scale—spanning 20 data centers—positions it as the regional leader. Globally, this aligns with a $1 trillion AI infrastructure boom projected by 2030, per McKinsey, where cloud providers capture 40 percent of spend. In Europe, GDPR-compliant AI tools from Alibaba are gaining traction, challenging AWS’s dominance.
For startups, Alibaba’s ecosystem offers lifelines: Its AI Foundry program has accelerated 500 ventures this year, providing free compute credits worth $100 million. Critics, however, warn of overhyping; energy demands from AI training could strain China’s grid, already facing blackouts in industrial hubs.
As Alibaba eyes a spin-off of its cloud unit by mid-2026, this quarter’s results affirm AI as its North Star. In a market where innovation outpaces regulation, the company’s fusion of commerce and compute could redefine digital economies, turning data into dollars at unprecedented speed. With Qwen 3 slated for December, expect more fireworks—Alibaba isn’t just surviving the AI wave; it’s riding it to new horizons.
