Alibaba Group Holding Ltd. reported a 75% drop in second-quarter net income as heavy spending on artificial intelligence infrastructure and regulatory penalties eroded the bottom line despite solid revenue growth.
Net income fell to 10.44 billion renminbi ($1.6 billion), while capital expenditure surged 75% to 67.68 billion renminbi. A 4.46 billion renminbi goodwill impairment and a 550 million euro provision tied to an EU Digital Services Act fine further pressured operating profit, which slid 57%. Revenue rose 9% to roughly 269 billion renminbi, driven by a 45% jump in cloud and AI services.
The company unveiled Qwen3.8-Max, a 2.4-trillion-parameter AI model it calls its most powerful to date. Alibaba's US-listed shares fell in pre-market trading as investors weighed the cost of the AI buildout against near-term profitability.