Alibaba net income drops 66% as quick commerce investment rises

Alibaba Group said the company’s net income was down 66% to 15.6 billion yuan (US$2.27 billion), and non-GAAP net income fell 67% to 16.7 billion yuan (US$2.43 billion), according to its financial results for the fourth quarter that ended December 31, 2025.

This comes as the tech giant’s revenue rose 2% year-on-year to 284.8 billion yuan (US$41.4 billion), noting that it stepped up investment in quick commerce.

Excluding disposed businesses Sun Art and Intime, the firm said revenue would have risen 9% on a like-for-like basis.

Income from operations fell 74% to 10.6 billion yuan (US$1.54 billion) and adjusted EBITA dropped 57% to 23.4 billion yuan (US$3.4 billion), which Alibaba linked to investments in quick commerce, user experiences, and tech.

Net cash provided by operating activities was 36 billion yuan (US$5.24 billion), down 49%, and free cash flow was 11.3 billion yuan (US$1.64 billion), down 71%.

Alibaba said Cloud Intelligence Group revenue rose 36%, and that AI product revenue logged triple-digit growth for a tenth straight quarter, while Qwen’s consumer interface surpassed 300 million monthly active users.

🔗 Source: Alibaba Group

🧠 Food for thought

Implications, context, and why it matters.

Alibaba’s earnings drop tracks its investment push

The profit slide lines up with management’s plan to pour money into quick commerce plus AI and cloud capacity, which has squeezed margins and weighed on near-term results.
For quick commerce, management said it wants Taobao Flash Purchase (Alibaba’s fast-delivery shopping service) to reach RMB 1 trillion in transaction volume within three years, and said loss per order was cut by half by October 2025 1.
Over the past four quarters, Alibaba put about RMB 120 billion into capital expenditure for AI and cloud expansion. Management called the market supply-constrained and said an “AI bubble” looks unlikely over the next three years 2, 1.

In AI, the money sits in infrastructure

Alibaba’s latest results put the clearest path to AI revenue in cloud infrastructure. Management said Alibaba Cloud’s AI server rollouts cannot match customer orders, and the backlog keeps growing 1.
Management tied that gap to supply chain limits that could last for years, which may keep AI computing scarce even as demand climbs. It also repeated the view that an “AI bubble” is unlikely in the next three years 1.
That dynamic favors large cloud providers that can rent out scarce computing power, a steady approach even if the winning AI applications change over time.