Alibaba Group reported strong quarterly results with accelerated revenue growth and AI monetization. Cloud revenue growth is at its strongest in 22 quarters, with AI-related revenue recording triple-digit growth for the twelfth quarter, and becoming the core engine.

“With our full‑stack AI strategy, we have put Alibaba in a superior position to capture the substantial growth of demand for artificial intelligence and AI compute,” said Eddie Wu, Chief Executive Officer of Alibaba Group.

This quarter, total Group revenue exceeded US$39.6 billion, up 9% year-over-year, and AI Cloud and Compute Services revenue reached US$7.1 billion, up 45% year-over-year, recording the 22-quarter high. Cloud segment adjusted EBITA increased by 133% to US$830 million, and EBITA margin expanded to approximately 12%, driven by surging AI demand and full-stack cost efficiency.

Cloud: Accelerating Growth with Expanded Margins

Alibaba’s AI monetization continued to broaden this quarter, with each layer of the AI stack contributing to returns. AI-related product revenue of US$1.8 billion extended triple-digit year-over-year growth for the twelfth consecutive quarter, reflecting sustained, broad-based demand.

A Bank of America Securities preview report described Alibaba as “one of the most compelling AI plays in China,” citing accelerating cloud growth and increasing AI monetization optionality as key factors.

The tight integration between Alibaba’s chip design unit, T-Head, and its foundation models has improved AI commercialization efficiency, creating synergies across the stack. That advantage is gaining traction, with the latest Zhenwu M890 AI processor adopted via Alibaba Cloud services by more than 650 external customers across 20-plus industries, including autonomous driving, financial services, and internet platforms.

AI Advances Across All Layers

Alibaba advanced AI capabilities across the technology stack this quarter. At the model layer, Alibaba launched frontier language, coding, video, audio, image, and music models, each delivering top-tier performance.

In the long run, Qwen’s open-source strategy, which has established strong mindshare among global developers, is extending reach beyond Alibaba and turning ecosystem adoption into cloud monetization opportunities. To date, the Qwen model series has been downloaded more than 3 billion times globally, with more than 300,000 derivative models.

At the application layer, Alibaba consolidated its AI tools into QwenWork, a unified AI-native workforce agent designed to unlock organizational-level productivity. On the consumer side,  Qwen App rolled out paid subscriptions for productivity and professional features in August.

In e-commerce. Qwen Shopping Assistant, launched on the Taobao app in May, guides users from product discovery through after-sales service, while merchants benefit from upgraded agentic capabilities on the platform that automate workflows across product listing, store management, advertising, and customer service.

Commerce: Quick Commerce Gaining Solid Momentum and Improved Efficiency

The China e-commerce business remains steady this quarter. Customer management revenue grew 1% on a like-for-like basis, excluding a contra revenue impact from the new business development program.

The 88VIP membership base, Alibaba’s highest-spending consumer cohort, continued to grow at a double-digit rate year-over-year, reaching approximately 64 million members as of the end of the quarter.

Quick commerce revenue rose 45% year-over-year to approximately US$7.9 billion, expanding its scale, improving unit economics, and accelerating loss reduction.

AliExpress achieved an operating profit this quarter through logistics optimization and cost efficiency enhancement, with local product supplies continuing to grow year-over-year.

Building for the Long Term

Alibaba invested nearly US$10 billion in capital expenditures this quarter, up 75% year-over-year, which reflects deliberate and continued AI-related investment to meet surging customer demand.

The company ended the quarter with US$69.9 billion in cash and liquid investments, providing financial flexibility to sustain that investment pace. The investment case is recognized by Morgan Stanley, which selected Alibaba as a Top Pick and believed Alibaba’s higher capex should fuel better medium-term returns.

The company also realigned into four reporting segments this quarter, reflecting its AI-first strategic focus.