Alibaba's latest results have reignited market interest: after their release, the stock moved sharply upwards and analysts focused on the AI + cloud combination as the group's main driver, according to analyses of how Alibaba does business.
In parallel, the company has accelerated its technology roadmap with price cuts on key products, advances in AI models, and signs that it wants to control more parts of the ecosystem, including hardware and services like Alipay , a move with which it seeks to gain traction against growing competition.
Results and market reaction
Alibaba reported revenue of 247.652 billion yuan (+1,8% year-on-year) and net profit of 43.110 billion yuan (+78%). This surge in profit was driven by capital gains and the sale of assets such as Trendyol, while adjusted EBITDA fell 10,6% due to increased investment and the push from instant commerce.
By division, cloud services were the biggest boost, generating 33.400 billion yuan in revenue (+26%), accelerating compared to the previous quarter and exceeding market expectations. Domestic sales in China rose 10% to 140.072 billion yuan, international operations (including AliExpress ) grew 19% to 34.741 billion yuan, and other areas such as Cainiao and Freshippo saw a 28% increase to 58.599 billion yuan.
The stock market reception was positive: shares rose as much as 13% on Wall Street by midday and climbed around 10% in Hong Kong, marking their best day in months. Even so, caution persists among investors due to the risks of the Chinese market, with recent exits from major firms and the memory of past volatile episodes prompting prudence.
Among experts, the idea of a "dual track" is gaining traction: AI and the cloud are driving scalable growth, while activities most exposed to consumer spending in China are facing intense price competition . Some analysts see Alibaba as one of the best AI enablers in the country due to its ability to combine infrastructure, models, and services.
AI and the Cloud: From Open Source to Revenue
Demand for artificial intelligence solutions drives the cloud business: AI-related products have seen eight consecutive quarters of triple-digit growth , with an increasing presence of external clients and the proprietary Qwen model leading the way.
To gain adoption, Alibaba implemented a drastic 97% price cut on the Qwen-Long API, a move that reflects the price war in China and its strategy of targeting enterprise customers. The company is confident that scale and integration with its cloud platform will facilitate monetization in the medium term.
On the product front, the group updated its Wan2.2-S2V video generation model , capable of turning portraits into avatars that speak or sing. The field, however, has become more competitive with the push from giants like Google and local players like Kuaishou, in a context marked by the rapid rise of new developments such as DeepSeek.
Investment accompanies this offensive: last year it allocated more than 100.000 billion yuan to infrastructure and AI projects and has announced plans to dedicate at least € 48.600 billion over the next three years. Eddie Wu maintains that these investments are already yielding “tangible results” and that the combination of cloud and intelligence will be, along with e-commerce, the group's other major driver.
Hardware and chips: a step forward in technological autonomy
Alibaba has unveiled its own AI chip , manufactured in a local factory and designed to run pre-trained models. Its compatibility with software commonly used with Nvidia hardware could facilitate its deployment, as the company seeks to reduce its reliance on Western suppliers.
Although Chinese semiconductors still face performance and stability challenges, this step is strategic: the goal is to encompass more layers of the ecosystem, from hardware to software. Public support—with funds directed toward AI and semiconductors—and market reaction suggest that controlling the entire technology stack could become a competitive advantage if the plan matures.
The picture left by the quarter is that of a business that is re-engaging the market thanks to the cloud and AI, adjusting prices to gain traction and exploring the field of its own chips, while facing fierce competition and a demanding regulatory environment; the challenge now is to transform technological momentum into sustained profitable growth without losing sight of operational discipline.