For the October-December quarter, the company, which shifted its focus to cloud and AI technologies in recent years, reported an overall revenue increase of 2% year-on-year to 284.8 billion yuan ($41.4 billion), lower than analysts’ estimates.
Revenue from its cloud business jumped 36% in the quarter to 43.3 billion yuan ($6.2 billion) from a year ago.CEO Eddie Wu said during an earnings call on Thursday that Alibaba stands to benefit from the “exponential growth in AI demand.” It has been expanding and upgrading its flagship Qwen AI app and consumer-facing chatbot and also provides cloud computing and storage services to commercial customers.
“(There is) enormous and sustained growth momentum of the AI market,” Wu said.Profit for the quarter was 16.3 billion yuan ($2.4 billion), down from 48.9 billion yuan the same quarter last year, in part due to growing marketing and sales expenses.
The Hangzhou-based company, which started out in e-commerce, has also seen a price war in the food delivery segment over the past months adding pressure to its profitability.
To help drive profit and amid rising costs and growing demand, the company said on Wednesday it would be increasing prices for some AI services by as much as 34%. It also launched the agentic AI tool Wukong this week, in an expansion of its products for commercial customers.
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Alibaba’s AI ambitions was also tested recently following the departure this month of Lin Junyang, head of its AI model division Qwen. Last year, the company pledged investments of at least 380 billion yuan ($53 billion) in three years to advance its cloud computing and AI infrastructure.
Chinese tech companies have been stepping up their competitiveness against U.S. rivals and growing their dominance, especially after AI startup DeepSeek sent shock waves across the industry last year.
(Edited by : Srabastee Biswas)
