Alibaba’s AI Investments Trigger First Operating Loss Since 2021

Alibaba Group has reported its first operating loss since 2021 after ramping up investment in artificial intelligence.

The Chinese e-commerce and technology company posted an operating loss of 848 million yuan ($123 million) for the quarter ending March 31, according to its official earnings statement on May 13.

The development contrasts with an operating profit in the same period a year earlier. Revenue grew 3 percent year on year to 243.38 billion yuan ($35.28 billion), but the growth fell short of some analysts’ forecasts.

Ant Group, the fintech affiliate backed by Jack Ma in which Alibaba holds roughly one-third ownership, also recorded a sharp profit decline.

Alibaba’s share of Ant’s profit, recorded one quarter behind, came in at 375 million yuan ($55 million). This implies Ant earned around 1.13 billion yuan ($166 million) in the quarter ending Dec. 31, 2025—a drop of about 79 percent from a year earlier.

According to Alibaba, the decline was driven by Ant’s increased investments in user growth and new technologies.

Cloud computing, one of Alibaba’s fastest-growing sectors, reported revenue of 41.63 billion yuan ($6.13 billion), up 38 percent year on year. Revenue from AI-related products reached nearly 9 billion yuan with triple-digit growth for the 11th straight quarter.

Chief Executive Eddie Wu said the company was moving from developing AI to using it at scale. He highlighted progress in its Qwen large language model and new tools for shopping and enterprise customers.

Chief Financial Officer Toby Xu stated: “We are confident in our business outlook and will continue to invest in AI + Cloud to strengthen our competitive advantages.”

Net income rose 96 percent to 23.5 billion yuan ($3.46 billion), boosted by gains from equity investments. However, a key adjusted profit metric fell sharply due to increased spending on AI, cloud infrastructure, and e-commerce initiatives.

For the full fiscal year ending March 31, Alibaba’s revenue grew 3 percent to just over 1 trillion yuan ($147 billion).

Based in Hangzhou, Alibaba operates some of China’s largest e-commerce platforms, including Taobao and Tmall, along with cloud computing services and a significant stake in Ant Group’s digital payments business.

Like other major Chinese tech companies, Alibaba is investing heavily in AI even as it faces investor pressure to demonstrate returns on those investments.

The company has raised prices for certain AI and cloud services and plans to list its chipmaking unit as it develops full-stack AI capabilities spanning software and hardware.