Alibaba pins hopes on AI as quarterly net profit drops

China’s tech giant Alibaba reported strong growth in its artificial intelligence (AI) business, even as its overall profits declined sharply.

The company said revenue from AI-related products is rising तेजी से, especially in its cloud division. Its Cloud Intelligence Group recorded a 36% increase in revenue during the October–December quarter, showing that AI is becoming a key growth driver. CEO Eddie Wu stated that AI will remain one of the company’s main engines for future growth.

However, despite this momentum, Alibaba’s net profit fell by 66% year-on-year to 15.6 billion yuan (about $2.2 billion). The company attributed this decline mainly to lower operating income. Its total revenue stood at 284.8 billion yuan, which was below market expectations.

Alibaba’s core e-commerce business is under pressure due to intense price competition and weak consumer spending in China’s slowing economy. To counter this, the company is investing heavily in AI, spending tens of billions of dollars to build new capabilities and products.

As part of this strategy, Alibaba has launched a new AI agent for businesses called “Wukong,” currently in beta testing. AI agents are seen as the next big step in technology, as they can perform real-world tasks like booking tickets or sending emails.

The company is also benefiting from the popularity of its open-source AI model Qwen, which now has over 300 million monthly active users globally. To improve efficiency and profitability, Alibaba is restructuring its AI operations under a new system called the “Alibaba Token Hub.”

The rise of tools like OpenClaw has also influenced the industry. Experts say that “tokens,” which represent AI computing power, are becoming as important as basic utilities like electricity or water.

Overall, while Alibaba is facing short-term financial pressure, it is betting heavily on AI to drive long-term growth and stay competitive in the rapidly evolving tech landscape.