Alibaba reported its financial results for the quarter and six months ending September 30, 2025, revealing strong momentum in its AI and cloud businesses but significant pressure on profitability as the company enters an aggressive investment cycle.

CEO Eddie Wu said the company is doubling down on “long-term strategic value” across AI technologies, cloud infrastructure, and a unified consumption platform integrating e-commerce with daily life services. Cloud Intelligence Group remained the standout performer—revenue jumped 34% year-over-year, driven by surging enterprise demand for AI tools. AI-related products posted triple-digit growth for the ninth straight quarter.

In its consumption business, Alibaba continued scaling quick commerce, improving unit economics and pushing rapid growth in monthly active users on Taobao. CFO Toby Xu noted that Alibaba has deployed roughly RMB120 billion in capex over the past four quarters to strengthen AI and cloud infrastructure, while cautioning that profitability will fluctuate in the near term.

Quarterly Performance: Revenue Up, Profit Down

Alibaba posted quarterly revenue of RMB247.8 billion, up 5% year-over-year, or 15% on a like-for-like basis excluding divested units Sun Art and Intime.
But income from operations fell 85% to RMB5.4 billion, weighed down by a 78% drop in adjusted EBITA due to heavy investment in quick commerce, user experience enhancements, and technology development.

Net income attributable to shareholders came in at RMB21.0 billion, down 53% from the prior year as operating income contracted sharply.
Free cash flow flipped to an outflow of RMB21.8 billion, compared to a RMB13.7 billion inflow last year, reflecting major spending on cloud infrastructure and commerce expansion. Alibaba ended the quarter with RMB573.9 billion in cash and liquid investments.

Six-Month Results: Modest Revenue Growth, Margin Pressure Continues

For the six-month period, revenue rose 3% to RMB495.4 billion, or 12% on a like-for-like basis. Income from operations dropped 43% to RMB40.4 billion, with adjusted EBITA declining 44% year-over-year.

Net income held up comparatively better, slipping 7% to RMB63.0 billion, supported by mark-to-market gains on equity investments, lower impairments, and gains from the disposal of Trendyol’s local consumer services unit.

However, free cash flow again swung into negative territory, with an outflow of RMB40.7 billion, driven by elevated capex for cloud expansion and quick commerce initiatives.

Alibaba emphasized that while its AI + Cloud and consumption businesses are delivering strong growth, it expects continued volatility in profitability as it reinvests heavily in future-focused infrastructure and next-generation services.