The Alibaba office building in Nanjing, Jiangsu province, China, on Aug. 28, 2024.
CFOTO | Future Publishing | Getty Images
Alibaba posted a better-than-expected bottom line in the June quarter fueled by accelerated sales at its cloud computing unit and a continued revival of its e-commerce business.
Still, the Chinese giant’s revenues came in under analyst forecasts.
Alibaba’s stock was up more than 1% in premarket trade in the U.S. after initially dipping.
Here’s how Alibaba did in its fiscal first quarter ended June, compared with LSEG estimates:
Revenue: 247.65 billion Chinese yuan ($34.6 billion), versus 252.9 billion yuan expected.Net income: 43.11 billion yuan, compared with 28.5 billion yuan expected.
Revenue rose 2% year-on-year, while the company’s net income was up 78%. Alibaba attributed the increase in profit to gains in some of its equity investments and the disposal of Turkish e-commerce firm Trendyol. This was offset by a decrease in income from operations.
Cloud accelerates
Alibaba said revenue at its cloud division totaled 33.4 billion yuan, up 26% year-on-year. That was faster than the 18% growth rate seen in the previous quarter. Alibaba’s cloud unit is seen as key to the company monetizing artificial intelligence, much like Microsoft or Google.
“Driven by robust AI demand, Cloud Intelligence Group experienced accelerated revenue growth, and AI-related product revenue is now a significant portion of revenue from external customers,” Alibaba CEO Eddie Wu said in a statement.
Investors are focused on Alibaba’s investments in artificial intelligence, where it has become a major global player. The company has aggressively launched various AI models and is selling services through its cloud computing division.
While Alibaba has focused open source AI — meaning its models can be used for free and built on by developers — it also sells AI services through its cloud unit.
Alibaba said AI-related product revenue “maintained triple-digit year-over-year growth for the eighth consecutive quarter.”
Adjusted earnings before interest, taxes, and amortization (EBITA), a measure of profitability, jumped 26% year-on-year in the cloud unit.
New York-listed Alibaba shares have risen more than 40% this year as revenue growth at its core China e-commerce business has improved and its cloud computing division has accelerated.
The company is dealing with uncertainty in the Chinese economy, which lost momentum in July. Earlier this year, Beijing had launched initiatives to boost consumption.
