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Alibaba’s AI cloud growth surge drives earnings despite soaring tech spending
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Ann Caoin ShanghaiandWency Chenin ShanghaiPublished: 6:16pm, 20 Aug 2026Updated: 10:42pm, 20 Aug 2026
Alibaba Group Holding on Thursday reported revenue growth of 45 per cent for its cloud and artificial intelligence division in the June quarter, driving adjusted profit to a better-than-expected 27.3 billion yuan (US$4 billion).
The company assured investors that its soaring spending on AI infrastructure would pay off, with executives noting in an earnings call that its AI computing investments would break even within three years – or possibly two as gross margins rose.
AI Cloud and Compute Services, the Chinese tech giant’s new reporting segment covering its cloud business and T-Head chip arm, posted 48.4 billion yuan in revenue for the three months ended June 30, marking its fastest growth pace in 22 quarters.
The unit’s adjusted Ebita – a measure of profitability, which stands for earnings before interest, taxes and amortisation – rose 133 per cent to 5.6 billion yuan, implying a margin of 11.6 per cent, up from 7.2 per cent a year earlier.
The segment’s AI-related product revenue maintained triple-digit growth for the 12th straight quarter, hitting 12.4 billion yuan, up from 8.97 billion yuan in the previous quarter.
Driven by these AI gains, the Hangzhou-based company’s total revenue increased 9 per cent year on year to 269 billion yuan for the quarter, in line with the Bloomberg consensus estimate of 268.5 billion yuan. That was faster than the 3 per cent growth seen in the previous quarter.
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