Alibaba stock is falling as it spends heavily on AI. CEO Eddie Wu insists the tech will be its main growth driver

Alibaba’s net income fell 66% year-over-year (YOY) for 2025’s fourth quarter while it invested heavily in AI.

In total, net income dropped from 46.4 billion Chinese yuan ($6.8 billion) to 15.6 billion Chinese yuan ($2.27 billion).

The downturn is one of multiple disappointments in the Chinese technology giant’s latest financial results, announced Thursday, March 19. Alibaba also reported a 71% decrease in diluted earnings per share YOY. 

Higher cloud revenue, but not high enough

Even Alibaba’s revenue, which rose 2% YOY, failed to meet expectations.

The company reached 284.8 billion Chinese yuan ($41.4 billion) in revenue for quarter four, falling short of Wall Street’s predicted 290.7 billion Chinese yuan ($42.3 billion), according to consensus estimates cited by CNBC. 

As of publication, U.S.-listed shares of Alibaba Group Holding Ltd (NYSE: BABA) were down more than 4% in premarket trading on Thursday. The stock is down more than 13% in 2026 so far.  

The small revenue increase was led by the company’s Cloud Intelligence Group, which rose 36% YOY. 

“Alibaba Cloud continues to lead the market, attracting more customers to onboard our comprehensive AI + cloud products and services, including high-performance networking, distributed storage, cloud operating system, and services for model training and inference,” the company stated in its release. 

Competing for global AI dominance

Alibaba has worked to position itself as a competitor to U.S.-based AI companies.

In October, Alibaba Cloud launched its second data center in Dubai as part of a pledge to invest 380 billion yuan ($55.3 billion) in AI and cloud infrastructure over three years.

It has also developed its own chips in response to uncertainty around Nvidia’s chip sales to China. 

Despite today’s earnings miss, the company says it remains committed to funding AI growth. 

“This quarter, Alibaba maintained strong investments across our core pillars of AI and consumption. AI is and will continue to be one of our primary growth engines,” Alibaba Group CEO Eddie Wu stated in the company’s financial report. “Looking ahead, we are well-positioned to drive growth on both enterprise AI and consumer AI fronts, powered by our full-stack AI capabilities spanning foundation models, cloud infrastructure, and proprietary chips, alongside deep integration with our broader ecosystem.”

View the full article