Alibaba Group's adjusted EBITA (earnings before interest, taxes and amortisation, adjusted) for the quarter ended in March dropped to 5.1 billion yuan, roughly $750 million. That represents an 84% decline year-on-year and signals a marked deterioration in the company's core operating profitability after excluding one-off items.
The decline largely reflects heavy spending on artificial intelligence and e-commerce initiatives. Alibaba has been investing substantial sums in AI chips, data centres and the development of its own language models, including the Qwen family. Some of these investments are beginning to pay off in the cloud segment: revenue from Alibaba Cloud grew 38% in the quarter, driven by Chinese demand for AI services.
However, investors have expressed concern about the firm's increasing outlays on quick commerce, the model promising delivery within about an hour. The cost of aggressive expansion in quick commerce is visible in the numbers: Alibaba’s Chinese e-commerce division saw its adjusted EBITA fall 40% year-on-year in the March quarter, while quick commerce revenue increased 57% over the same period.
At the same time, Alibaba’s largest revenue source, customer management, recorded only a 1% revenue increase in the quarter.
After the results, Alibaba shares were trading about 1% lower in pre-market session.
Why this matters
The figures illustrate that Alibaba's strategy of investing heavily in AI and faster-delivery e-commerce is weighing on near-term profitability. Cloud and AI investments are producing revenue growth, but the rapid roll-out of quick commerce is exerting significant cost pressure on the core e-commerce business.
These investments could strengthen Alibaba's competitive position over time, yet the quarterly results reflect a temporary weakening of operating profit.
(This article is not investment advice.)
