Alibaba's adjusted net profit falls 38pc, misses market estimates

Alibaba's (9988) adjusted net profit declined 38 percent year-on-year to 20.7 billion yuan (HK$24.15 billion) for the quarter ended June, missing the market expectations of 25.4 billion yuan.

The e-commerce giant attributed the decrease to the growing investment in technology, which was partly offset by the improved cloud business.

Its net profit also fell sharply by 76 percent to 10.54 billion yuan during the quarter.

Revenue rose 9 percent to 268.95 billion yuan, in line with market estimates.

The company's AI cloud and compute services revenue rose 45 percent to 48.44 billion yuan in the quarter, driven by public cloud revenue growth, including the increasing adoption of AI-related products.

Alibaba's capital expenditures rose 75 percent to 67.68 billion yuan in the quarter, mainly due to fluctuations in procurement cycles, an increase in CPU-compute capacity driven by anticipated growing customer adoption of AI agents, and higher pricing of a broad range of chip components.

Revenue from Alibaba E-commerce Group rose 4 percent to 205.9 billion yuan. Among them, income from China e-commerce business fell 8 percent to 110.9 billion yuan, while that of China quick commerce business jumped 45 percent to 53.3 billion yuan.

Its AI Labs and Applications revenue also climbed 16 percent to 3.3 billion yuan, while all other segments generated 28.8 billion yuan, up 1 percent from a year ago.

Besides, Alibaba's financial subsidiary Ant Group's quarterly profits rose 1 percent to about 4.7 billion yuan during the period, according to Reuters calculations.

Alibaba's US-listed shares went down nearly 1 percent in pre-market trading.

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