Alibaba Group Holding Ltd. (NYSE:BABA) is leaning more heavily on artificial intelligence and cloud computing to drive its next phase of growth. However, heavy technology spending, weaker e-commerce performance and subdued consumer demand in China are weighing on profits and cash flow.
Revenue Rises, but AI Spending Weighs on Profit
Alibaba reported fiscal first-quarter 2027 revenue of $39.64 billion, up 9% year over year and above the $38.63 billion analyst estimate.
However, adjusted earnings per ADS fell 42% to $1.26, missing expectations of $1.85. Adjusted net income declined 38% to $3.05 billion, while adjusted EBITA fell 30% to $4.03 billion. Net income plunged 75% to $1.54 billion.
Alibaba attributed much of the earnings pressure to technology investments. Stronger cloud results and improved efficiency across other businesses partly offset the impact.
