Alibaba posts strong profit growth as AI and cloud drive momentum

However, operating performance weakened due to heavy investment.

Alibaba Group reported a 96% jump in quarterly net income, driven by rapid growth in AI and cloud services, improved China e-commerce performance, and investment gains.

Net income attributable to ordinary shareholders reached $3.69b (RMB25.48b) for the quarter ended March 31, 2026, whilst revenue rose 3% year over year to $35.28b (RMB243.38b). Excluding divested businesses Sun Art Retail and Intime, comparable revenue growth was 11%.

Cloud and AI remained the main growth drivers. External cloud commercial revenue increased 40%, with AI-related revenue contributing 30% of total cloud revenue. The company said AI-related product revenue has delivered triple-digit growth for 11 straight quarters.

Despite strong earnings, operating performance weakened due to heavy investment. The company reported an operating loss of $123m (RMB848m), compared with a profit a year earlier.

Adjusted EBITA also fell 84% to $740m (RMB5.10b), driven by spending on AI, instant retail, and user experience, partially offset by stronger cloud and customer management performance.

Chief Executive Officer Wu Yongming said Alibaba’s “full-stack AI technology investment” has moved beyond the incubation stage and entered a “positive cycle of large-scale commercial returns.”

The company highlighted progress across its AI ecosystem, including advances in its Qianwen large language model, expansion into video generation and world models, and the rollout of enterprise-focused intelligent agents for office and programming applications. Alibaba also integrated e-commerce service capabilities into its consumer-facing Qianwen app to strengthen synergies between AI services and its consumer platforms.

Meanwhile, Alibaba’s domestic e-commerce operations also contributed to growth. Customer management revenue for China e-commerce rose 8% quarter over quarter on a comparable basis, whilst the company said instant retail unit economics and average order values continued to improve.

Chief Financial Officer Xu Hong said Alibaba plans to continue investing heavily in AI and cloud infrastructure to reinforce long-term strategic advantages.