Alibaba quarterly profit drops 75% as AI investment spending grows - ABC News

Alibaba quarterly profit drops 75% as AI investment spending grows China's Alibaba reports a 75% drop in profit for the latest quarter from the year before to roughly $1.6 billion as it invests heavily in AI infrastructure By CHAN HO-HIM AP business writer August 20, 2026, 11:05 AM HONG KONG -- HONG KONG (AP) — China’s technology giant Alibaba on Thursday reported a 75% drop in profit for the latest quarter as it invested big in artificial intelligence infrastructure, even as revenue coming from its AI-related services gained 45%. The Hong Kong- and U.S.-listed company, which started out in e-commerce and online retail but is increasingly focused on AI technologies, said that its profit for April-June was at 10.5 billion yuan ($1.6 billion), down from 43.1 billion yuan ($6.4 billion) the same quarter last year. Quarterly revenue grew 9% to almost 269 billion yuan (nearly $40 billion), with revenue from its AI cloud and compute services up 45% to 48.4 billion yuan ($7.2 billion). But capital expenditures, including investments in AI infrastructure to meet customer demand, jumped 75% to 67.7 billion yuan (about $10 billion) during the quarter, weighing on profits. Alibaba attributed the significant increase in spendings to factors including “fluctuations” in procurement cycles, increase in CPU, or central processing unit, compute capacity in anticipation of growing customer adoption of AI “agents” and higher pricing of chip components. “As we continue to ramp up our supply, our AI and Cloud revenue growth will accelerate further in the coming quarters, alongside continued improvement in profitability,” said Alibaba CEO Eddie Wu in prepared remarks during an earnings conference. Actress Hayden Panettiere dies at 36, found in cardiac arrest Aug 17 Hayden Panettiere's rep is 'hopeful justice will be served' as DEA joins probe 19 hours ago Police report gives new details on scene of Hayden Panettiere's death Aug 18 Alibaba’s U.S.-traded shares fell more than 3% Thursday. Alibaba, one of China’s biggest companies, said last year it planned to invest at least 380 billion yuan (about $56 billion) over three years in cloud computing and AI infrastructure. It has been making advances with its flagship Qwen AI and has launched “agentic” AI services for commercial customers. In July, it previewed its Qwen3.8-Max AI model which the company said was “second only” to Anthropic’s Claude Fable 5. It has also pledged an ambitious goal of surpassing $100 billion in terms of annual AI and cloud revenue within the next five years. Related Topics Artificial Intelligence Sponsored Content by Taboola Actress Hayden Panettiere dies at 36, found in cardiac arrest Aug 17 Police report gives new details on scene of Hayden Panettiere's death Aug 18 Hayden Panettiere's rep is 'hopeful justice will be served' as DEA joins probe 19 hours ago Mom stabbed to death by teen with whom she was in intimate relationship: Police 2 days ago ABC News Live 24/7 coverage of breaking news and live events