Chinese tech giant Alibaba posts profit drop amid AI drive
Alibaba Reports Decline in Net Profit Amid Increased AI Investments
HONG KONG — Chinese tech giant Alibaba announced Wednesday that its net profit fell nearly 20% during its most recent fiscal year, impacted by domestic economic challenges and costly investments in artificial intelligence.
The company, known for its major online shopping platforms, experienced pressure on its core e-commerce sector due to competitive pricing and slow consumer spending in China, the world’s second-largest economy.
For the fiscal year ending March 31, Alibaba reported a net profit of 105.9 billion yuan ($15.6 billion), a decrease from 129.5 billion yuan the previous year. This represents an 18% year-on-year decline.
In the final financial quarter, the company’s revenue increased by 3% compared to the same period last year, totaling 243.4 billion yuan.
“Alibaba’s full-stack AI investments have progressed from incubation to commercialization at scale,” said CEO Eddie Wu in a statement. He noted that the firm achieved significant advancements in models, cloud infrastructure, and applications during the recent quarter.
The company’s open-source Qwen AI models have gained popularity among programmers globally. Alibaba recently announced the integration of Qwen’s agentic features into its widely used Taobao shopping app, enhancing user functionality.
Wu emphasized the “massive potential for agentic AI” in his statement.
Analysts at Bloomberg Intelligence indicated that Alibaba is likely to increase its emphasis on AI integration across its ecosystem in fiscal year 2027, suggesting the company will maintain high expenditure to boost user adoption.
In addition, Alibaba, along with Tencent, is reportedly in discussions to invest in AI startup DeepSeek, which launched a significant new AI model in April. Reports suggest that the funding round for DeepSeek could value the company at up to $50 billion, though Alibaba has not yet commented on these discussions.
Despite the rising global interest in AI, Alibaba’s shares have struggled this year on U.S. and Hong Kong exchanges. The firm has previously faced regulatory scrutiny as part of a broader crackdown on the Chinese tech sector initiated in late 2020, amid concerns that major companies had amassed too much power.
Jack Ma, Alibaba’s co-founder, had largely remained out of the public eye during this period. However, his unexpected return in February 2025 for a meeting with President Xi Jinping and business leaders indicated a potential easing of government pressures, leading to a surge in Alibaba’s stock.
While Ma is no longer an executive at the company, he is believed to retain a substantial ownership stake.
In a separate announcement on Wednesday, Tencent reported a 21% increase in its quarterly net profit, reflecting substantial investments in AI as well.
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