Alibaba reported a sharp decline in profitability for the June quarter as the company continued to ramp up investment in artificial intelligence infrastructure. Net profit fell about 75% year over year, while capital expenditures surged 75% as Alibaba expanded AI computing capacity, developed new foundation models, and invested in cloud infrastructure. Revenue increased 9% to 268.95 billion yuan, supported by continued strength in AI and cloud services.
Alibaba Cloud remained the company’s fastest-growing business. Revenue from AI cloud and computing services climbed 45%, while the newly launched Qwen3.8-Max model highlighted Alibaba’s push to strengthen its position in China’s increasingly competitive AI market. The company said AI-related products have now delivered double- and triple-digit growth for multiple consecutive quarters.
The results underscore Alibaba’s strategy of prioritizing long-term AI leadership over near-term profitability. Heavy investment weighed on earnings and free cash flow, but management continues to position AI infrastructure and cloud computing as the company’s primary growth engines. Investors initially reacted negatively, with Alibaba’s U.S.-listed shares declining in premarket trading following the earnings release.
