Alibaba profit sinks 75% as AI spending surges

Big Caps Written by: Angela Harmantas 11:14 Thu 20 Aug 2026 --> Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Angela Harmantas Angela Harmantas is an Editor at Proactive. She has over 15 years of experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from numerous countries around the world, including Canada, the US, Australia, Brazil, Ghana, and South Africa for leading trade publications. Previously, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government. She earned a Bachelor of... Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Alibaba Group ( NYSE:BABA ) View Price & Profile Alibaba profit sinks 75% as AI spending surges Published: 11:14 20 Aug 2026 EDT Alibaba Group (NYSE:BABA) reported a 75% drop in quarterly profit on Thursday, as heavy investment in artificial intelligence infrastructure squeezed margins at China's e-commerce and cloud giant. Net income for the June quarter fell to 10.4 billion yuan ($1.5 billion), missing analyst estimates of 26.98 billion yuan. Adjusted earnings per ADS came in at 8.52 yuan, well below the 11.26 yuan expected and down 42% from a year earlier. Capital expenditure jumped 75% to 67.7 billion yuan, far exceeding forecasts of 29.22 billion yuan. Alibaba attributed the increase to uneven timing of customer purchases, expanded CPU-compute capacity and higher prices across a broad range of chip components. Revenue rose 9% to 269 billion yuan, roughly in line with estimates of 269.3 billion yuan. Free cash flow was negative 44.7 billion yuan, far below the negative 12.80 billion yuan analysts had projected. The company's AI push continued to show momentum on the top line. AI-related product revenue posted triple-digit growth for the twelfth consecutive quarter, and AI revenue has now tripled for twelve straight quarters. By segment, AI Cloud and Compute Services generated 48.4 billion yuan in revenue, with adjusted EBITA of 5.6 billion yuan, up 133% year-over-year. China E-commerce Business revenue reached 110.9 billion yuan, while the Alibaba E-commerce Group posted adjusted EBITA of 39.7 billion yuan, down 1% from a year earlier. AI Labs and Applications contributed 3.3 billion yuan in revenue. Adjusted EBITDA fell 14% to 39.1 billion yuan, above the 37.5 billion yuan estimate, while adjusted EBITDA margin narrowed to 15% from 18% a year earlier. Income from operations dropped 57% to 15.2 billion yuan. Alibaba's 88VIP loyalty program had approximately 64 million members. Shares of Alibaba fell more than 3% in US trading Thursday morning. Continue reading