Alibaba is spending heavily to secure its place in China’s artificial intelligence race, and the June quarter offered a clearer view of both sides of that bet. Its cloud business accelerated, overall revenue growth picked up, and AI-related products maintained triple-digit growth. At the same time, capital expenditure more than doubled from the previous quarter, adjusted earnings fell, and free cash flow remained deeply negative.
Alibaba reported revenue of RMB 269 billion (USD 39.9 billion) for the quarter ended June 30, up 8.6% year-on-year (YoY). That marked an acceleration from 2.9% growth in the March quarter.
The standout was AI cloud and compute services. Revenue from the segment increased 44.9% to RMB 48.4 billion (USD 7.2 billion), while revenue from AI-related products reached RMB 12.4 billion (USD 1.8 billion). The latter has recorded triple-digit growth for 12 consecutive quarters, according to Alibaba.
That growth has required a sharp increase in spending. Alibaba recorded RMB 67.7 billion (USD 10 billion) in capital expenditure during the quarter, up 75% from a year earlier and 151.6% from RMB 26.9 billion (USD 4 billion) in the March quarter.
The sequential jump was notable because it reversed four quarters of moderating expenditure. Alibaba’s capex declined from RMB 38.7 billion (USD 5.7 billion) in the June 2025 quarter to RMB 31.5 billion (USD 4.7 billion) in September, RMB 29 billion (USD 4.3 billion) in December, and RMB 26.9 billion in March, before rising to RMB 67.7 billion in June.
