Alibaba U.S.-listed shares jumped nearly 5% in premarket trading on Friday following the Chinese company’s first-quarter earnings report.
The Chinese technology giant’s advancements in artificial intelligence are accelerating, according to Alibaba Group Holding Ltd.’s quarterly earnings report.
For its first quarter of fiscal 2026, Alibaba (BABA) reported sales of $34.6 billion, 2% higher than the FactSet estimate of $35.2 billion, missing consensus revenue estimates. However, the company’s quarterly net income exceeded all forecasts.
BABA reported $5.9 billion in net income, which was 76% higher than the $3.7 billion consensus estimate for the same period last year. Although adjusted earnings were 10% lower than the previous year, they were still higher than the $1.97 consensus at $2.06 per share.
The company claims that the sale of Turkish e-commerce company Trendyol and gains from equity investments were the main drivers of the sharp increase in net income year over year.
In premarket trading, Alibaba’s American depositary receipts increased by almost 5%.
The company’s cloud-intelligence division grew at the quickest rate, accounting for $4.7 billion of total revenue, a 26% increase from the previous year.
Alibaba’s biggest business division, e-commerce, reported $12.5 billion in revenue, up 10% from the year before.
BABA is increasing its capital expenditures for AI development, much like the Magnificent Seven group of megacap tech companies. During the quarter, the company reported investing $5.4 billion, or 38.6 billion yuan (USDCNY), in its cloud infrastructure.
Alibaba CEO Eddie Wu reiterated the company’s three-year commitment to invest $380 billion yuan ($53 billion) in expanding its cloud and AI infrastructure during the earnings call.
Alibaba’s strong focus on its cloud business demonstrates its desire to innovate and stay competitive in the global race to develop artificial intelligence.
The use of Nvidia Corp.’s (NVDA) chips in China is controversial due to trade-war tensions, geopolitical issues, and national security concerns.
China is also developing its own AI tech stack that is separate from the U.S. According to the Wall Street Journal, Alibaba has created a new chip that it is currently testing and that may serve as a domestic substitute for Nvidia’s H20.
Although Alibaba’s U.S.-listed stock has risen 40% so far this year, it has seen volatility since trade-war tensions increased in April.
Source : Dow Jones Newswires
