Alibaba: AI bet erodes profits

Beijing - Chinese e-commerce giant Alibaba Group Holding Limited (Alibaba) announced on Wednesday an 18 percent drop in its annual net profit. The results were weighed down by a price war in China and ambitious investments in artificial intelligence (AI).

The Hangzhou-based group (eastern China) operates some of China's largest online shopping applications, such as Taobao (widely used in China) and AliExpress (used abroad).

E-commerce is Alibaba's core business. It is, however, being hampered by a price war and sluggish consumption in China, forcing the company to offer discounts on its platforms.

To diversify, the company is investing tens of billions of euros in AI. Its shareholders are waiting to see how it plans to turn these huge sums into tangible profits.

Alibaba's net profit for the 2025-2026 financial year amounted to 105.9 billion yuan (15.59 billion dollars), down from 129.5 billion yuan the previous year. This represents a drop of 18 percent, the group announced in a statement to the Hong Kong Stock Exchange.

Annual revenue, meanwhile, reached 243.4 billion yuan, up 3 percent year-over-year.

“Alibaba's investments in AI at all levels of its technology chain have moved from the incubation stage to large-scale commercialisation,” said Eddie Wu, the group's chief executive officer.

From B2B to A2A commerce

Alibaba's open-source AI models, named “Qwen”, are popular with programmers worldwide. The company announced this week that it has integrated Qwen's “agentic” functions—tools capable of performing complex tasks for users—into its star application, Taobao.

In the statement on Wednesday, Wu said he sees “enormous potential” in these AI agents, which are capable of acting without human intervention. In early May, the company also stated in a press release that global commerce is now shifting from traditional business-to-business (B2B) to agent-to-agent (A2A) commerce.

Bloomberg Intelligence analysts said before the results were released that Alibaba “will likely further strengthen the integration of AI into its ecosystem during the 2027 financial year”. The group will maintain “high spending to stimulate user adoption (of AI tools),” they predict.

This article was translated to English using an AI tool.

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