Alibaba missed revenue expectations for the December quarter, reporting 284.8 billion yuan ($41.4 billion) compared to 290.7 billion yuan projected by analysts. Net income dropped 66% to 15.6 billion yuan, driven by declines in operational income and significant investments in AI, cloud infrastructure, and commerce. The company is focusing heavily on AI as a growth engine, with its cloud business revenue up 36% and AI-related products driving triple-digit growth. U.S.-listed shares fell 4% in premarket trading.
Key Points
- Alibaba reported it had missed revenue expectations in its December-quarter earnings.
- The company made 284.8 billion Chinese yuan ($41.4 billion), compared to the 290.7 billion Chinese yuan expected by analysts.
- Alibaba is one of several Chinese AI firms that have been rushing to catch up to U.S. companies in the AI race.
Chinese tech giant Alibaba on Thursday reported net income had dropped 66% year-over-year, as it missed analyst revenue expectations.
Here’s how Alibaba performed its fiscal quarter, ending Dec. 31, 2025:
- Revenue: 284.8 billion Chinese yuan ($41.4 billion), compared to the 290.7 billion Chinese yuan expected by analysts, according to data compiled by LSEG.
- Net income: 15.6 billion Chinese yuan compared to 46.4 billion Chinese yuan in the same period a year ago.
Alibaba’s U.S.-listed shares dropped 5% in premarket trading on Thursday.
The tech giant noted that the net income decrease was primarily due to the 74% year-on-year drop in operational income which was impacted by investments in quick commerce, user experiences and technology.
The results were “softer” than expected and below expectations on revenues, adjusted net profit, and adjusted operational income, Citi analysts said in a note. The slight acceleration in cloud revenue growth, which sat at 36% year-on-year, was a “positive note” coming in 1% above its consensus, but market expectations were higher, they said.
Alibaba is one of several Chinese AI firms that have been rushing to catch up to U.S. companies in the AI race.
“This quarter, Alibaba maintained strong investments across our core pillars of AI and consumption,” Alibaba CEO Eddie Wu, said in a statement.
“AI is and will continue to be one of our primary growth engines. Our Cloud Intelligence Group’s revenue is up 36% with AI-related product revenue delivering triple-digit growth for the tenth consecutive quarter.”
Revenue from Alibaba’s cloud business was 43.3 billion Chinese yuan. “This momentum was primarily driven by public cloud revenue growth, including the increasing adoption of AI-related products,” the company said.
It’s pledged tens of billions of dollars in investments in AI and cloud infrastructure, as it looks to transition from being just an e-commerce giant to an AI leader.
In January, the tech giant announced a new AI model series, and has also been investing in ‘agentic commerce’ as it looks to turn chatbots into full-service shopping and payment tools.