Alibaba’s (阿里巴巴) latest earnings underline the cost of trying to reboot growth at speed. For the September quarter, the Chinese e-commerce and cloud giant reported a steep profit slump even as revenue continued to climb, a trade-off the company framed as deliberate. Alibaba is spending aggressively – on instant retail, logistics and AI infrastructure – and it is showing up clearly in the numbers.
Operating profit fell 85% year-on-year, while net income dropped by more than half. Alibaba earnings decline can be attributed to higher investment across Taobao and Tmall, particularly subsidies, fulfilment capacity and cloud computing, alongside heavier spending on user experience. In short: growth is being bought, not earned cheaply.
Revenue still rose 5% to RMB 247.8 billion (around US$35 billion). On a comparable basis, stripping out restructuring effects, Alibaba said growth was closer to 15%. The standout performer was instant retail, now the fastest-growing segment inside the group.
Much of that momentum comes from Taobao Flash Sale, Alibaba’s push into ultra-fast local commerce. Since launching in April, the service has expanded rapidly, onboarding thousands of Tmall brands and sharply lifting order volumes. But adoption has been driven by heavy subsidies on both the consumer and merchant side – a familiar China playbook that boosts scale quickly while dragging near-term profitability.
Cloud was the other bright spot. Revenue growth accelerated on rising AI demand, with Alibaba earnings pointing to triple-digit growth in AI-related services, including model training and inference workloads. That momentum comes with a cost: capital expenditure rose, and free cash flow slipped into negative territory for the quarter.
Alibaba is cushioned, for now, by a formidable balance sheet. The company ended the period with RMB 573.9 billion (about US $ 81 billion) in cash and other liquid investments. But the message from this quarter is clear. Alibaba is once again in spend-first mode, betting that instant retail and AI infrastructure will secure its next growth runway even if it means taking a sharp hit to profits today.
