Alibaba's AI Spending Lifts Capex 75% as Quarterly Profit Falls 76%
Alibaba reported a 9% year-on-year revenue increase to RMB268.95 billion for the quarter ended June 30, but net income attributable to ordinary shareholders dropped 76% to RMB10.54 billion. Capital expenditure surged 75% driven by AI infrastructure investments.
Chinese technology giant Alibaba announced its financial results for the quarter ending June 30, reporting RMB268.95 billion in revenue, a 9% increase compared to the same period last year. However, the company's net income attributable to ordinary shareholders saw a significant decline, falling 76% to RMB10.54 billion.
The substantial increase in capital expenditure, rising 75% to RMB67.68 billion, was primarily attributed to increased investments in the company's artificial intelligence (AI) infrastructure. Revenue from Alibaba's AI cloud and computing services grew by 45% to RMB48.44 billion. Furthermore, revenue from AI-related products continued its strong performance, achieving triple-digit growth for the twelfth consecutive quarter, reaching RMB12.38 billion.
In parallel with its investment strategy, Alibaba has undergone a significant organizational restructuring. The company has reorganized its e-commerce, cloud computing, and AI model businesses into new operating groups. This move is intended to enhance synergies and competitiveness across its diverse business units in the rapidly evolving technology landscape.
Operating cash flow for the quarter stood at RMB22.95 billion. The company's focus on AI development and infrastructure reflects a strategic push to capitalize on the burgeoning AI market amidst intensifying global competition.