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← Alibaba Group

Alibaba Group — 2026Q3 earnings

reported 2026-08-20

EPS $8.52 vs $10.82 est — miss

next session -8.6% (close 2026-08-20 → 2026-08-21)

Source

Press release ↗

Summary

Group revenue grew 9% to RMB268,953 million, but the growth was concentrated in the newly renamed AI Cloud and Compute Services segment, where revenue growth accelerated to 45% and AI-related product revenue of RMB12,376 million marked a twelfth straight quarter of triple-digit growth. Everything below the revenue line went the other way: net income fell 75%, hit by lower adjusted EBITA, a goodwill impairment and a provision, and by much smaller investment gains. Capital expenditures rose 75% year-over-year, turning free cash flow into a RMB44,670 million outflow, so the quarter reads as management trading near-term earnings and cash for AI compute capacity.

Review

From the report

Alibaba's June 2026 quarter was an AI-capex quarter: cloud revenue growth accelerated to 45% while group profit fell 75% and free cash flow swung to a RMB44,670 million outflow on record AI infrastructure spending.

  • Group revenue grew 9% year-over-year to RMB268,953 million, a modest headline for a quarter framed around AI. show quote
    “Revenue was RMB268,953 million (US$39,639 million), an increase of 9% year-over-year.”
    source ↗
  • The cloud and compute segment is the growth engine: its revenue reached RMB48,437 million with growth accelerating to 45%. show quote
    “For the quarter ended June 30, 2026, revenue from AI Cloud and Compute Services was RMB48,437 million (US$7,139 million). The year-over-year growth of total revenue and revenue from external customers both accelerated to 45%.”
    source ↗
  • AI product revenue is now disclosed as its own line at RMB12,376 million, with triple-digit growth for the twelfth consecutive quarter. show quote
    “AI-related product revenue continued to show strong momentum, achieving RMB12,376 million (US$1,824 million) and delivering the twelfth consecutive quarter of triple-digit year-over-year growth.”
    source ↗
  • Profit collapsed: net income fell 75% year-over-year on weaker operations and much smaller investment gains. show quote
    “Net income was RMB10,444 million (US$1,539 million), a decrease of 75% year-over-year, primarily attributable to the decrease in income from operations, decrease in net gains from disposal of investments, and the decrease in net gain from mark-to-market changes of our equity investments.”
    source ↗
  • Capital expenditures rose 75% year-over-year to RMB67,678 million as the AI infrastructure buildout accelerated. show quote
    “During the quarter ended June 30, 2026, capital expenditures were RMB67,678 million (US$9,975 million), an increase of 75% compared to RMB38,676 million in the same quarter of 2025, reflecting our continued investments in AI infrastructure to meet strong and growing customer demand.”
    source ↗

as of 2026-08-20