Alibaba Group Holding Limited reported its fiscal second‑quarter 2026 results, covering the period ended September 30 2025. Revenue rose 5% to RMB 247.8 billion (US$34.8 billion), surpassing consensus estimates of roughly RMB 243 billion. The revenue gain was driven largely by the Cloud Intelligence Group, whose revenue climbed 34% YoY to RMB 39.8 billion, powered by triple‑digit growth in AI‑related products.
Adjusted diluted earnings per share fell to US$0.61, missing the consensus estimate of US$0.81 by $0.20. The miss reflects the company’s continued heavy investment in AI and cloud infrastructure, which has increased operating costs and compressed margins. Income from operations declined 85% year‑over‑year, and net income fell 52–53%, underscoring the short‑term profitability impact of the investment phase.
The company’s cloud segment remains a key growth engine. Cloud Intelligence Group revenue of RMB 39.8 billion represents a 34% increase, while quick‑commerce revenue grew 60% YoY, indicating strong demand for Alibaba’s integrated e‑commerce and logistics services. In contrast, traditional e‑commerce segments saw modest growth, highlighting the shift in focus toward high‑margin cloud and AI services.
Management emphasized that Alibaba is in an “investment phase” aimed at building long‑term strategic value. CEO Eddie Wu said the company is “building AI technology and infrastructure platforms as well as a large consumer platform that integrates lifestyle services with e‑commerce.” CFO Toby Xu noted that roughly RMB 120 billion has been deployed in capital expenditures over the past year, primarily for AI and cloud infrastructure.
The results signal a strategic pivot: revenue growth is now driven by AI and cloud, while profitability is temporarily suppressed by capital spending. Investors and analysts will likely view the EPS miss as a trade‑off for future growth, and the company’s guidance for the next quarter remains unchanged, reflecting confidence in the continued demand for AI‑powered cloud services.
The earnings beat and EPS miss illustrate Alibaba’s prioritization of long‑term value creation over short‑term profitability, a shift that may influence future guidance and capital allocation decisions.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.