Alibaba Profit Falls 67% on AI, Cloud Investments

Alibaba Group Holding Limited reported a sharp decline in quarterly profit on Tuesday, attributing the drop to heavy investments in cloud computing, artificial intelligence, and rapid delivery services, even as its AI-driven cloud business showed robust growth.

For the quarter ended December 31, net income fell approximately 67 percent from the previous year to 2.38 billion, or 1.01 per share, on revenue that rose 2 percent to 40.7 billion. The results prompted an initial dip in the company's shares, though the stock later climbed 3.1 percent to close at 126.16 on Monday amid broader market movements.

The profit contraction stemmed from deliberate spending rather than underlying operational issues, according to company executives. Alibaba is channeling resources into expanding its cloud infrastructure and developing AI technologies, alongside scaling its quick commerce operations. These efforts, while boosting long-term potential, have compressed margins in the short term. In the quick commerce segment, aggressive growth in logistics networks and customer acquisition has driven up costs, with profitability not expected until fiscal 2027.

Despite the overall earnings pressure,...