Alibaba's Revenue Jumps 9% as AI Cloud Growth Hits 45%—But a Profit Plunge Sends Shares Lower

In brief

• Alibaba's fiscal first-quarter revenue rose 9% year-over-year to 268.95 billion yuan ($40 billion), narrowly beating the 268.88 billion yuan analyst estimate, while net income fell 75% to RMB 10.44billion ($1.6 billion).
• Alibaba Cloud's external revenue growth accelerated to 45%, and AI-related product revenue logged its 12th straight quarter of triple-digit growth, reaching 12.38 billion yuan ($1.82 billion).
• Capital expenditure jumped 75% to 67.7 billion yuan ($10 billion), pushing free cash flow to a $6.6 billion outflow; U.S.-listed shares fell as much as 5% before paring the drop to roughly 3.5%.

Chinese tech titan Alibaba reported fiscal first-quarter revenue of 268.95 billion yuan, roughly $40 billion, on Thursday, up 9% year-over-year and slightly ahead of the 268.88 billion yuan analysts expected.

It's the fastest quarterly growth rate the company has posted in roughly three years. Almost all of it traces back to one business line: cloud and AI.

The cloud division is where the growth is coming from. Alibaba Cloud's external revenue growth accelerated to 45%, and AI-related product revenue hit 12.38 billion yuan ($1.82 billion)—its 12th consecutive quarter of triple-digit year-over-year growth. CEO Eddie Wu attributed the quarter's strength to improving commercialization of the company's full-stack AI push, according to Alibaba's earnings statement.