Alibaba’s U.S.-listed shares fell 4% in premarket trading Thursday after the Chinese tech giant reported a 75% drop in net income for the June quarter, as aggressive spending on artificial intelligence infrastructure weighed on results.
The company’s capital expenditure jumped 75% to 67.7 billion Chinese yuan, driven by uneven timing of customer purchases, an increase in CPU-compute capacity, and higher prices across a broad range of chip components, Alibaba said.
Despite the profit hit, Alibaba’s cloud division—seen as key to monetizing AI, much like Microsoft or Google—posted revenue of 48.4 billion yuan, up 45% year-on-year.
U.S.-listed shares were last trading down 4.11%.
The spending surge underscores the intensifying race among Chinese tech firms to build out AI capabilities, even as investors grapple with the near-term cost to profitability. Alibaba’s heavy investment in AI infrastructure mirrors similar moves by U.S. hyperscalers, but the sharp profit decline highlights the financial strain of such bets.
Analysts will be watching whether Alibaba’s cloud growth can accelerate enough to justify the elevated spending, as the company positions itself to compete in the AI-driven cloud market against domestic rivals and global players.
Source: www.cnbc.com — https://www.cnbc.com/2026/08/20/alibaba-cloud-revenue.html
This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Do your own research and consult a licensed professional before making financial decisions.
