Alibaba reported lower-than-expected sales for the first quarter of its fiscal year on Friday, as the Chinese group’s online commerce business continued to struggle with stiff competition and subdued consumer demand — overshadowing gains from its growing cloud computing division.
Reuters
The group’s U.S.-listed shares rose 2% in pre-market trading.
Consumer confidence in China remains fragile, as the ongoing real estate crisis, sluggish wage growth, and disruptions to global trade impact it.
Shoppers stayed cautious, even as e-commerce platforms launched heavy discounts and price cuts to stimulate spending.
This caution muted the impact of a strong performance in Alibaba’s cloud segment, where sales rose 26% to 33.40 billion yuan (€3.98 billion), up from 18% growth in the previous quarter.
Analysts polled by LSEG had expected an 18.4% increase to 31.44 billion yuan.
Alibaba has emerged as one of China’s most aggressive players in artificial intelligence, rolling out new advancements nearly every week — including a recent model that transforms portrait photos into realistic video avatars.
“AI-related revenues now account for a significant portion of sales from external customers,” said Alibaba Group CEO Eddie Wu.
For the quarter ended in June, the group reported total revenue of 247.65 billion yuan, which was below the LSEG consensus estimate of 252.92 billion.
Operating profit declined 3% year-on-year, while adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) dropped 14%, primarily due to continued investments in its instant commerce segment.
This article is an automatic translation. Click here to read the original article.
