Alibaba said it is working on a rival to ChatGPT, the artificial intelligence chatbot that has caused excitement across the world. Alibaba said its own product is currently undergoing internal testing.
Kuang Da | Visual China Group | Getty Images
Shares of Alibaba fell sharply on Tuesday after the Chinese tech giant’s net profit plunged in the fiscal fourth quarter.
Here’s how Alibaba did in the March quarter versus LSEG consensus estimates:
- Revenue: 221.9 billion yuan ($30.7 billion) versus 219.66 billion yuan expected.
Net income attributable to ordinary shareholders came in at 3.3 billion yuan, down 86% year on year.
Shares of Alibaba closed down 6% in the U.S. after falling as much as 8.1% in the first hour of trading.
Alibaba had a rocky year in 2023, when it carried out its largest-ever corporate structure overhaul. It also separately implemented several high-profile management changes, with company veteran Eddie Wu taking over the reins as chief executive in September.
In a bid to signal confidence to shareholders, the Chinese tech giant said earlier this year that it increased its share buyback program by $25 billion through the end of March 2027.
Alibaba has been grappling with cautious consumer spending in China, but saw signs of a slight recovery in its core e-commerce business in the March quarter.
The Hangzhou-headquartered company has been ramping up its overseas push amid a domestic slowdown, where Alibaba has faced rising competition from low-cost players like PDD.
Revenue for the Taobao and Tmall division, which houses Alibaba’s China e-commerce business, rose 4% year on year to 93.2 billion yuan. That was faster than the 2% growth in the previous quarter.
Customer management revenue — which is sales received from services such as marketing that Alibaba sells to merchants on its Taobao and Tmall e-commerce platforms — rose 5% year on year, after coming in flat in the previous quarter. Alibaba’s international commerce business also logged a revenue increase of 45% year on year to 27.4 billion yuan.
Earlier this year, CEO Wu vowed to “reignite” growth in the e-commerce firm with further investments. There appear to be early signs of that taking hold in the March quarter.
“This quarter’s results demonstrate that our strategies are working and we are returning to growth,” Wu said in the earnings release.
The profit drop casts a long shadow on the earnings. Alibaba said the reason for the fall is “primarily attributable to a net loss from our investments in publicly-traded companies during the quarter, compared to a net gain in the same quarter last year, due to the mark-to-market changes.”
Alibaba touts AI growth
Investors are laser focused on Alibaba’s cloud computing division, which has struggled to reignite growth. The company was planning to spin off the cloud unit, but scrapped plans for an initial public offering last year.
Alibaba said its cloud computing unit brought in revenue of 25.6 billion yuan, up just 3% year on year and marking the same growth rate seen in the previous quarter.
The Chinese giant said it is in the process of reducing “low-margin project-based” contracts in its cloud division and expects artificial intelligence-related products and public cloud, which relates to enterprise customers, to “offset the impact of the roll-off of project-based revenues.”
During the March quarter, AI-related revenue experienced “triple-digit growth year-over-year.”
“AI-related revenue was generated from various sectors including foundational model companies, internet companies, as well as customers from industries such as financial services and automotive,” Alibaba said.
