Alibaba's Net Profit Drops 60% Year-over-Year in New Quarter, While AI Shows Three-Digit Consecutive Growth

On March 19, Alibaba Group released its Q3 FY2026 financial report, showing total revenue of 284.843 billion yuan, up 2% year-over-year; net profit of 15.631 billion yuan, down 66%; and adjusted net profit of 16.71 billion yuan, down 67% year-over-year.

Looking at specific businesses, instant retail revenue grew 56% year-over-year, making it the fastest-growing segment among the company’s various businesses; cloud intelligence group revenue reached 43.28 billion yuan, up 36%; while all other businesses—including Hema, Cainiao, Alibaba Health, Huhu Jingyu Group, Amap, Qianwen C-end Business Group, Lingxi Interactive Entertainment, DingTalk, and others—declined 25% year-over-year, mainly due to revenue decreases from the disposal of Gengxin Retail and Yintai businesses and Cainiao’s revenue decline.

Over the past year, Alibaba has invested heavily in instant retail subsidies, AI research and development, and other areas. Alibaba stated that the overall profit decline was mainly due to investments in instant retail, user experience, and technology. Goldman Sachs described this earnings report as a “key profit reset event,” noting that Alibaba’s profit decrease is caused by investments in the Qwen AI model/application and may continue to lead to increased losses in the “all other” business segments over the next few quarters.

Alibaba indicated that the company continues to invest in AI and consumer sectors this quarter. The Qianwen app and Alibaba’s consumer ecosystem applications are accelerating integration, significantly driving new user growth and transaction activity. Despite overall profit pressure from strategic investments, AI and cloud computing businesses still showed impressive growth, with AI-related product revenue achieving triple-digit growth for the tenth consecutive quarter, making AI one of Alibaba’s main growth engines.

For the first time, “Pingtouge” appeared in Alibaba’s financial report. Its self-developed GPU has achieved mass production, supporting internal Alibaba operations and providing commercial services to hundreds of external enterprise clients via Alibaba Cloud, contributing substantially to cloud infrastructure supply. Wu Yongming stated, “In the future, relying on ‘large models + cloud + chips’ full-stack AI capabilities and full integration with Alibaba’s business ecosystem, we will continue to advance in AI for B2B (enterprise) and B2C (consumer) directions.”

Source: Beijing Daily Client

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