Hong Kong-listed shares of Alibaba Group Holdings soared 18% on Monday, buoyed by a sizable jump in quarterly net income and accelerating sales from its cloud division, even as overall revenue came in below analyst forecasts.
Alibaba posted a net profit of CNY 43.11 billion for the quarter ending June, handily surpassing LSEG estimates of CNY 28.5 billion. Revenue reached CNY 247.65 billion, rising 2% year-on-year but falling short of the CNY 252.9 billion yuan expected by the market.
The company said profit growth was driven by gains in some equity investments and the sale of Turkish e-commerce platform Trendyol, offsetting a dip in operating income. Excluding one-off investment gains, however, net income dropped 18% as Alibaba continued to funnel capital into China’s increasingly competitive instant commerce sector.
Investors have responded favorably to renewed growth in Alibaba’s key cloud computing and e-commerce segments, pushing its U.S.-listed shares up 40% year-to-date. The company is investing heavily in artificial intelligence and new digital commerce models, aiming to show it can expand in spite of fierce domestic competition.
Alibaba’s cloud unit was a standout, with revenue climbing 26% to CNY 33.4 billion, outpacing the 18% increase logged in the preceding quarter. CEO Eddie Wu highlighted robust AI demand as a driver, noting that revenue from AI-related cloud products now forms a significant share of external sales. The company also revealed it is developing a next-generation AI chip, news that further fueled Friday’s share rally.
Alibaba reiterated that its priority is to maintain cloud division growth above industry averages, rather than boosting margins in the near term. Adjusted EBITA for the cloud business rose 26% year-on-year, underlining improving profitability.
At home, Alibaba’s e-commerce platform recorded mixed performance. Core e-commerce revenue, which comprises over half of Alibaba’s top line, advanced 10% to CNY 19.6 billion. Customer management revenue—the company’s business from marketing and merchant services—also rose 10%.
However, adjusted profits for the segment slipped 21% as the group ramped up spending on instant commerce features, targeting near-instant deliveries via its flagship Taobao app. The strategy pits Alibaba against rivals like Meituan and JD.com in a crowded market, where Meituan recently reported an 89% drop in adjusted net profit.
Alibaba’s instant commerce revenue grew 12% to over CNY 14.8 billion. Management said on Friday’s earnings call the new business could add CNY 1 trillion in annualized incremental gross merchandise value (GMV) within three years, though GMV is not counted directly as company revenue.
Internationally, Alibaba posted a 19% surge in revenue for its global online shopping businesses such as AliExpress, as losses narrowed in the segment.
