TLDR:
- Alibaba missed Q4 earnings expectations on both revenue and profit
- Shares dropped 5% in premarket trading
- Revenue grew 7% year-on-year despite missing analyst targets
- Cloud business showed accelerated growth of 18% year-on-year
- AI-related products achieved “triple-digit growth” for seventh straight quarter
Alibaba shares tumbled in premarket trading on Thursday after the Chinese e-commerce giant reported fiscal fourth quarter earnings that fell well short of analyst expectations.
The company posted net income of 12.4 billion yuan ($1.71 billion), significantly below the 24.7 billion yuan that analysts had forecast. Revenue came in at 236.5 billion yuan ($32.6 billion), slightly missing expectations of 237.2 billion yuan.
Shares were down 5% in premarket trading at 6:02 a.m. ET, reflecting investor disappointment with the results.
Strong Cloud Performance
Despite the earnings miss, there were bright spots in Alibaba’s report. The company’s cloud business showed robust performance, with revenue increasing 18% year-on-year to 30.1 billion yuan. This growth rate accelerated compared to the previous quarter.
CEO Eddie Wu highlighted that AI-related product revenue achieved “triple-digit growth for the seventh consecutive quarter,” though he did not provide specific figures.
Alibaba has been positioning itself as a leader in artificial intelligence both in China and globally. In April, the company launched the latest version of its open source large language model, Qwen 3, which powers its AI assistant Quark.
E-commerce Business Shows Resilience
Alibaba’s core Taobao and Tmall group division, which represents its China e-commerce business, saw revenue rise 9% to 101.4 billion yuan. This growth rate was faster than what the company reported in the previous quarter.
Customer management revenue, a key driver for the company that comes from selling marketing and other services to merchants, jumped 12% year-on-year.
To boost purchases on its platforms, Alibaba recently extended a partnership with Rednote (Xiaohongshu), an Instagram-like service in China. The deal allows Taobao links to be embedded in Rednote posts, so users can be taken directly to product shopping pages.
However, Alibaba continues to face intense price competition from rivals like PDD and JD.com in the Chinese market.
The company is also dealing with macroeconomic challenges affecting consumer sentiment in China. Trade tensions between Washington and Beijing created uncertainty during the quarter, though both sides recently agreed to suspend most tariffs on each other’s goods this month.
Alibaba’s net income, while disappointing to analysts, was still 279% higher year-on-year, albeit from a low base. The company mentioned that it saw some losses from the disposal of certain subsidiaries, which was offset by increased income from operations and changes to valuations of its equity investments.
The stock has had a strong year despite Thursday’s drop, with shares up nearly 60% in 2025 prior to the earnings announcement. This performance has far outpaced both the Hong Kong Hang Seng Index, which is up 18% this year, and the S&P 500, which has gained just 0.3%.
Investors had been hoping that China’s economic rebound and the company’s investments in artificial intelligence would help Alibaba meet or exceed expectations.
Earlier this week, Washington and Beijing brokered a deal to scale back tariffs for 90 days. The U.S. also reduced its de minimis tariffs on small goods from China to 54% from 120%, which could potentially boost Alibaba’s international sales in future quarters.
The latest earnings miss comes as Chinese tech companies continue to ramp up investments in artificial intelligence. Rival Tencent announced a 91% year-on-year increase in capital expenditures in the first quarter, driven by investments in AI.
The Chinese government has also been introducing policies to stimulate consumption and consumer purchases, which could benefit e-commerce platforms like Alibaba’s in the coming quarters.
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