ByBrendan Ahern,
Senior Contributor.
Alibaba reported fiscal year Q2 earnings after the Hong Kong close, as topline revenue beat expectations while adjusted net income and adjusted EPS missed.
Revenue growth was impacted in Alibaba's year-over-year (YoY) comparison due to the elimination of the company’s Sun Art supermarket and Intime department store business. Topline revenue growth would have been up 15% YoY if we eliminated the two divested business lines from last year’s revenue. The company’s investments in quick commerce and cloud hit the bottom line, though the stock’s initial reaction was focused on strong cloud sale growth.
CEO Eddie Wu stated, “Robust AI demand further accelerated our Cloud Intelligence Group business, with revenue up 34% and AI-related product revenue achieving triple-digit year-over-year growth for the ninth consecutive quarter.” The company reaffirmed it will continue to invest in AI, as the previously announced RMB 380B target investment amount might be “small”. This will weigh on the bottom line, but as long as the company executes on cloud growth and gains market share, investors are apt to overlook. The company mentioned having a 35.8% market share according to an industry report.
