Alibaba Q3 Profit Drops 67% Amid AI Investments

Alibaba Group Holding Limited reported a significant profit decline in its third fiscal quarter ending December 31, 2025, as the Chinese technology giant intensified investments in artificial intelligence and quick commerce, leading to a sharp drop in its shares. The company's net income fell 67 percent year-over-year to 2.39 billion, while revenue rose 2 percent to 40.73 billion, missing analyst expectations. Shares in New York traded down 2 percent to 122.41 on Friday, following a 6.4 percent decline in Hong Kong, contributing to a combined market value loss of about 66 billion for Alibaba and peer Tencent over 24 hours.

The earnings highlighted a tale of two segments within Alibaba. Its core e-commerce platforms, Taobao and Tmall, showed stabilizing but modest growth, with China commerce revenue increasing 6 percent year-over-year, largely propelled by quick commerce expansion. Taobao Instant Commerce revenue surged 56 percent to 2.98 billion, reflecting heavy investments in instant delivery and user experience enhancements to counter rivals like Pinduoduo and Douyin. However, these efforts compressed margins, as sales and marketing expenses climbed to 25.3 percent of...