The Japan Times - Chinese tech giant Alibaba posts profit drop amid AI drive

Alibaba, which runs some of China's biggest online shopping platforms, has seen its core e-commerce business squeezed by price wars and sluggish consumption in the world's second-largest economy.

The Hangzhou-based firm is ploughing tens of billions of dollars into AI, with its shareholders keen to see how the company will approach the tricky task of monetising these huge investments.

For the year ended March 31, Alibaba recorded a net profit of 105.9 billion yuan ($15.6 billion), a statement at the Hong Kong Stock Exchange said, down from 129.5 billion in the previous fiscal year.

That figure represented a year-on-year drop of 18 percent.

During the final financial quarter, revenue grew by three percent year-on-year to 243.4 billion yuan, the statement said.

"Alibaba's full-stack AI investments have progressed from incubation to commercialisation at scale," CEO Eddie Wu was quoted as saying in the statement.

During the most recent quarter, the firm "achieved accelerated breakthroughs across models, cloud infrastructure, and applications", Wu said.

Alibaba's open-source Qwen AI models are popular with programmers worldwide.

This week, the tech behemoth said it had integrated Qwen's agentic features -- which can carry out tasks for users -- across its hugely popular Taobao shopping app in China.

Wu said in Wednesday's statement that Alibaba sees "massive potential for agentic AI".

- AI fervor -

Bloomberg Intelligence analysts had said ahead of the earnings results that Alibaba "is likely to lean even harder into AI integration across its ecosystem in fiscal 2027".

The company will keep "expenditure high to spur user adoption", they said.

Alibaba, along with fellow Chinese tech titan Tencent, is reportedly in talks to invest in top AI startup DeepSeek, which in April released a long-awaited major new artificial intelligence model.

AFP had no immediate response from Alibaba on the reports, which said DeepSeek's funding round could value it at as much as $50 billion.

Meanwhile Alibaba's own AI offerings have been attracting attention for their high quality, with its "HappyHorse" video generator topping benchmarks when it was released in April.

Alibaba was previously in the crosshairs of an aggressive regulatory crackdown on the Chinese tech sector launched in late 2020 and attributed to worries in Beijing that top firms had become too powerful.

Jack Ma, the firm's charismatic co-founder who had spoken boldly about the shortcomings of China's financial and regulatory system, kept a low profile during the lengthy campaign.

His sudden reappearance in February 2025 during a meeting with President Xi Jinping and other business luminaries was a shock development that suggested a warmer stance from Beijing and sent Alibaba stocks soaring.

Ma is no longer an executive at Alibaba but is believed to retain a significant shareholding in the company.

The firm's shares at stock exchanges in both the United States and Hong Kong have struggled this year despite the global AI investment boom.

In other results posted to the Hong Kong Stock Exchange on Wednesday, tech sector peer Tencent reported a 21 percent jump in quarterly net profit.

The video game giant, headquartered in the southern tech hub of Shenzhen, has also funnelled substantial investment into AI in recent years.

M.Sugiyama--JT