Alibaba Profit Plunges 75% to $1.6 Billion as AI Spending Nears $10 Billion
Updated
Updated · Bloomberg · Aug 20
Alibaba Profit Plunges 75% to $1.6 Billion as AI Spending Nears $10 Billion
3 articles · Updated · Bloomberg · Aug 20
Summary
$1.6 billion in net income marked a drop of more than 75% for Alibaba, even as quarterly revenue rose 9% and matched analyst estimates.
Nearly $10 billion in quarterly capital spending drove the hit, as Alibaba poured money into AI projects and computing infrastructure to defend its position in the global AI race.
$6.6 billion in free cash outflow underscored the cost of that expansion, while demand for cloud computing capacity remained strong.
Alibaba's US shares fell more than 4% in pre-market trading, reflecting investor concern that heavy AI investment is eroding near-term profitability.