Alibaba Posts 9% Revenue Growth, 75% Profit Plunge
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- Alibaba posted fiscal Q1 revenue of 268.95 billion yuan ($40B), up 9% YoY and slightly ahead of the 268.88 billion yuan analyst estimate — its fastest quarterly growth in roughly three years.
- Net income collapsed 75% to 10.44 billion yuan ($1.6B) as capital expenditure jumped 75% to 67.7 billion yuan ($10B), swinging free cash flow to a $6.6B outflow.
- Alibaba Cloud external revenue growth accelerated to 45%, with AI-related product revenue hitting 12.38 billion yuan ($1.82B) — its 12th consecutive quarter of triple-digit YoY growth, per CEO Eddie Wu.
- Alibaba released Qwen 3.8-Max as open weights and shut down the free tier of its Qwen Code coding agent in April, while Apple is pairing its in-house model with Qwen to bring Apple Intelligence to Chinese iPhones.
- Chinese open-weight models jumped from under 2% of tokens generated on OpenRouter in late 2024 to roughly 61% by mid-2026, even as Alibaba's quarterly profit shrank by three-quarters.
- U.S.-listed Alibaba shares fell as much as 5% before paring losses to roughly 3.5% by midday.
Why it matters: Alibaba's capex spiked 75% to 67.7 billion yuan ($10B) for AI compute while net income dropped 75%, swinging free cash flow to a $6.6B outflow. The 45% cloud growth and Apple-Qwen partnership show distribution is working — but the profit-for-growth tradeoff is what Wall Street is pricing.
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