Alibaba Profits Go Up Despite Soft Sales

Chinese e-commerce giant Alibaba saw its net income soar 58% year-on-year in the September quarter, reaching $6.07 billion. This eye-popping growth, largely driven by gains in equity investments and reduced impairments, beat many analysts’ expectations. However, sluggish revenue growth of 5% reflected headwinds from China's weak economic climate.

Despite these challenges, Alibaba’s U.S.-listed shares climbed 3% in premarket trading, adding to their nearly 17% gain year-to-date. Investors were most pleased by robust performance in Alibaba’s core platforms, Taobao and Tmall Group, which achieved a modest but still encouraging 1% revenue increase. During China’s Singles’ Day shopping festival, these units reported strong gross merchandise volume growth and a record number of active buyers, signaling resilience in consumer sentiment.

Alibaba’s cloud business was another bright spot, with revenue rising 7% year-on-year, an improvement from 6% growth in the prior quarter. This overall growth reflects the company’s focus on AI-driven products, which delivered triple-digit growth. The division continues to position itself as a key profitability driver, recently signing a five-year deal with Indonesian tech giant GoTo and rolling out new AI tools for small businesses in Europe and the Americas.

What Does This Mean for Me?

While Beijing recently launched a massive stimulus package aiming to revitalize China’s economy, the broader retail environment remains fragile. Still, October retail sales grew 4.8% year-on-year, exceeding forecasts. For Alibaba, its outlook remains closely linked with China’s economic trajectory and regulatory landscape, but its ongoing innovations in AI and cloud technology suggest it is well-placed for future growth.