Alibaba Cloud and AI business drives strong growth despite logistics challenges

Published: 2025-05-16 13:01:07 ET BABA

Published on 05/16/2025 at 13:01

Key takeaways

Strong growth in cloud and AI

Alibaba experienced significant growth in adjusted core income in the fourth quarter, driven by strong demand for artificial intelligence solutions within its cloud computing business. This increase was partially offset by the challenges faced by the company's logistics division, which affected overall revenue figures.

Alibaba has strategically invested heavily in expanding its cloud computing and AI infrastructure over the past three years, aiming to capitalize on the burgeoning potential of these technologies. The company's cloud intelligence division saw an impressive 18 percent year-on-year increase in quarterly revenue to 30.13 billion yuan (about 3.65 billion euros), beating Bloomberg consensus estimates. CEO Eddie Wu emphasized the company's commitment to prioritize core business and promote AI and cloud computing as key drivers of future growth.

Challenges in logistics and direct sales

However, efforts to integrate logistics offerings into the e-commerce platform led to a decline in revenue at Cainiao, Alibaba's logistics unit. Revenue for this segment fell 12 percent to 21.57 billion yuan (about 2.70 billion euros). Alibaba also reported a decline in direct sales within its Chinese retail business, which was attributed to a strategic reduction in certain direct sales activities.

These financial results come amid China's ongoing efforts to boost consumer spending and revitalize its struggling real estate sector through government incentives. Overall, Alibaba Group revenues rose 7 percent to 236.45 billion yuan (about 29.7 billion euros), slightly below market expectations. Adjusted earnings before interest, taxes, depreciation and amortization rose an impressive 36 percent year-on-year to 41.78 billion yuan (about 5.3 billion euros).

Alibaba has positioned itself as a frontrunner in China's fiercely competitive AI landscape, consistently unveiling new models throughout the year. The company's latest innovation, Qwen 3, an upgraded version of its flagship AI model launched in April, introduces advanced hybrid reasoning capabilities.

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