Alibaba (BABA) Shares Decline After 84% Profit Plunge Overshadows Cloud Growth

Key Takeaways

Table of Contents

Core adjusted EBITA plummeted 84% to 5.1 billion yuan ($750.9M) compared to the same period last year
Total revenue reached 243.4 billion yuan, slightly below analyst projections of 247.1 billion yuan
Cloud division revenue soared 38% to 41.6 billion yuan, while AI-related revenue reached 8.97 billion yuan
Rapid delivery services posted 57% revenue growth, though significant investment dragged domestic e-commerce profit down 40%
Shares of BABA dropped up to 4% in premarket hours before stabilizing around 1.3%-2% down

Shares of Alibaba (BABA) tumbled as much as 4% during Wednesday’s premarket session following the announcement of an 84% collapse in core profitability during the March quarter, despite impressive gains in its cloud computing and artificial intelligence divisions.

$BABA Q4'26 EARNINGS HIGHLIGHTS

🔹 Revenue: $35.28B (Est $35.8B) 🔴; +3% YoY
🔹 Adj. EPS: $0.09 (Est ~$0.83) 🔴; -95% YoY
🔹 Cloud Intelligence Revenue: $6.04B; +38% YoY
🔹 Quick Commerce Revenue: $2.90B; +57% YoY
🔹 Free Cash Flow: $(2.51)B

Segment Performance:
🔹 China… pic.twitter.com/xLYtpjnSEc

— Wall St Engine (@wallstengine) May 13, 2026

The company’s adjusted EBITA registered just 5.1 billion yuan ($750.9 million), representing a dramatic decline from the prior year’s figures. This measurement excludes exceptional items to provide a clearer picture of underlying business performance.

Quarterly revenue through March 31 totaled 243.4 billion yuan — representing a modest 3% increase year-over-year but falling short of the 247.1 billion yuan Wall Street consensus. When accounting for the divestment of Sun Art and Intime retail operations, revenue expanded 11% on a comparable basis.

Alibaba Group Holding Limited, BABA

The stock initially rose in early premarket activity before reversing direction to trade approximately 1.3% to 2% lower.

The primary narrative driving results is aggressive capital deployment. The Chinese tech giant has been channeling substantial resources into chip development, data infrastructure expansion, its Qwen suite of AI models, and rapid delivery operations — a service promising delivery times under one hour.

Cloud Division and AI Show Strength

The cloud segment emerged as the clear winner. The Cloud Intelligence Group generated revenue of 41.6 billion yuan, marking a 38% year-over-year surge that exceeded analyst forecasts of 41.27 billion yuan. The division’s adjusted EBITA advanced 57%.

Revenue from AI-related products hit 8.97 billion yuan. This achievement represents the eleventh straight quarter of triple-digit percentage growth year-over-year. CFO Toby Xu attributed the performance to deliberate strategic capital allocation.

“Cloud Intelligence Group’s revenue continued to accelerate, with AI-related product revenue achieving triple-digit growth for the eleventh consecutive quarter,” Xu stated.

Alibaba’s Qwen AI technology ranks among the world’s most advanced systems. Earlier this week, the company announced plans to integrate a Qwen-powered shopping assistant directly into Taobao, its primary e-commerce platform.

Domestic E-Commerce Faces Headwinds

The picture is more nuanced for the company’s home market e-commerce operations. China e-commerce division revenue totaled 122.22 billion yuan, surpassing analyst expectations of 119.85 billion yuan. Customer management revenue — the segment’s largest component — increased by 1%.

However, margins in this division suffered significantly. Adjusted EBITA declined 40% year-over-year as escalating investment expenses took their toll.

The rapid delivery business provided a positive element amid broader challenges. Revenue from this service expanded 57% compared to the previous year, demonstrating robust consumer demand. This category has evolved into a major competitive arena for Chinese e-commerce giants.

A new wave of government incentives encouraging consumers to upgrade electronic devices provided tailwinds for China’s e-commerce industry during the quarter.

Alibaba’s board has authorized an annual cash dividend of $0.13125 per ordinary share, equivalent to $1.05 per American depositary share, which will be distributed to shareholders on record as of June 11.

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