Alibaba Revenue Up 9%, AI Cloud 45%, Profit Drops 75% — SkimNews
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- Alibaba reported fiscal Q1 revenue of 268.95 billion yuan (~$40 billion), up 9% YoY and narrowly beating analyst estimates of 268.88 billion yuan—its fastest quarterly growth in roughly three years.
- Alibaba Cloud external revenue growth accelerated to 45%, with AI-related product revenue hitting 12.38 billion yuan ($1.82 billion) for its 12th consecutive quarter of triple-digit YoY growth.
- Alibaba's net income fell 75% to 10.44 billion yuan ($1.6 billion) as capital expenditure surged 75% to 67.7 billion yuan ($10 billion), driven by chip prices and compute capacity expansion; free cash flow swung to a $6.6 billion outflow and U.S. shares dropped as much as 5%.
- CEO Eddie Wu attributed the cloud strength to improving commercialization of Alibaba's full-stack AI push, as the company released Qwen 3.8-Max as open weights earlier this month and shut down the free tier of its Qwen Code agent in April.
- Apple is pairing its in-house model with Alibaba's Qwen to bring Apple Intelligence to Chinese iPhones—a deal that could make Apple the first foreign company allowed to run a proprietary AI model inside China.
- Chinese open-weight models surged from under 2% of tokens generated on OpenRouter in late 2024 to roughly 61% by mid-2026.
Why it matters: Alibaba is choosing growth over margins—funneling $10 billion into AI infrastructure while net income drops 75%—with the Apple-Qwen partnership potentially making Apple the first foreign company to run proprietary AI inside China, validating Alibaba's distribution-over-training bet.
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