- Cloud revenue growth hit a nine-quarter high as AI products scaled across enterprise and consumer services
- Profitability came under pressure despite record annual revenue and strong AI demand
Alibaba Group said on May 13 that AI-related revenue accounted for more than 30% of its external cloud business for the first time, marking what the company described as a transition from heavy investment into large-scale commercialization.
The Chinese tech giant reported fiscal fourth-quarter revenue of 243.38 billion yuan ($35.84 billion), up 3% year-on-year, while full-year revenue surpassed 1 trillion yuan for the first time, reaching 1.02 trillion yuan.
Excluding divested businesses, comparable quarterly revenue growth stood at 11%.
Alibaba Cloud’s external commercial revenue rose 40% during the quarter, the fastest pace in nine quarters.
Revenue from AI-related products reached 8.97 billion yuan, while annualized recurring revenue exceeded 35.8 billion yuan after posting triple-digit yearly growth for 11 consecutive quarters.
“Alibaba’s full-stack AI investments have officially moved beyond the incubation stage and entered a phase of positive large-scale commercial returns,” Chief Executive Eddie Wu said.
Infrastructure expansion
Alibaba attributed part of that growth to infrastructure expansion. The company said its internally developed Pingtouge GPU chips had entered mass production, with more than 60% of computing capacity now serving external customers across sectors including finance, internet services and autonomous driving.
Alibaba Cloud maintained the largest share of China’s infrastructure-as-a-service (IaaS) market, which rose to 32.8%, according to Gartner.
In March, customer numbers on its Model-as-a-Service (MaaS) platform Bailian increased eightfold from a year earlier.
On the application side, Alibaba expanded AI agents for enterprise use cases including office automation and AI coding tools.
Its Qwen app also integrated with Taobao and Tmall, allowing users to complete shopping tasks directly through AI interactions.
Separately, Taobao launched an AI shopping assistant covering product recommendations, purchasing and after-sales services.
“We are shifting from a ‘cloud-first’ strategy to an ‘AI-first’ strategy,” Wu said during the earnings call. “Future growth will increasingly come from the deep integration of AI capabilities.”
Alibaba’s core commerce business remained stable, with customer management revenue rising 8% year-on-year. Revenue from instant retail services surged 57%, while losses narrowed further.
The earnings report also highlighted mounting profitability pressure tied to the company’s AI push. Alibaba posted an operating loss of 848 million yuan for the quarter, compared with operating profit of 28.5 billion yuan a year earlier.
Adjusted EBITA fell 84% to 5.1 billion yuan, while non-GAAP net profit excluding investment gains, share-based compensation and impairment charges dropped to 86 million yuan.
