Alibaba’s quarterly numbers look dramatic at first glance: core profit dropped 84 percent. But CEO Eddie Wu remains unfazed — and is defending the company’s massive AI investments.
The Numbers
Alibaba spent heavily on AI infrastructure last quarter: proprietary chips, data centers, and continued development of the Qwen model family. That crushed profits. At the same time, the cloud division is growing double digits — driven by AI demand.
Wu’s message to investors is clear: the return on AI investment is ‘extremely clear.’ The company views its spending not as cost, but as the foundation for future growth.
China’s AI Bet
Alibaba represents a trend that’s playing out across China. Chinese tech giants are investing aggressively in AI — despite export restrictions on Western chips and geopolitical uncertainty.
Alibaba’s Qwen models are now among the most capable open-source models in the world. And the cloud business benefits directly: companies running AI workloads on Alibaba’s cloud are driving revenue up.
What Investors Think
Market reaction was mixed. The profit collapse is concerning, but the cloud growth is convincing. It’s the same debate happening at Western tech companies: how much can AI infrastructure cost before it pays off?
Nobody has the answer yet. But Alibaba has made its choice — and it’s going all in on AI.
Sources: CNBC