Alibaba June-Quarter Net Profit Plunges 75% as Capex Soars 75%; Cloud Revenue Up 45%
Alibaba reported a 75% year-on-year decline in net profit for the quarter ended June, attributing the slump to massive spending on AI infrastructure. Capital expenditure surged 75% to RMB 67.7 billion, driven by uneven customer purchase timing, expanded CPU compute capacity, and higher prices for chip components. The company's cloud business, seen as central to commercializing AI, grew revenue 45% to RMB 48.4 billion in the quarter. In response, Alibaba's US-listed shares fell 4.11% in pre-market trading on Thursday.
Alibaba's US-listed shares fell 4% in pre-market trading on Thursday, after the Chinese tech giant reported a 75% year-on-year drop in net profit for the quarter ended June. The company attributed the performance to heavy investment in artificial intelligence infrastructure, with capital expenditure for the quarter rising 75% year on year to RMB 67.7 billion. The spending increase was due to uneven customer purchase timing, an increase in CPU compute capacity, and higher prices for various chip components.
Meanwhile, Alibaba's core cloud business generated revenue of RMB 48.4 billion in the period, up 45% year on year. The cloud unit is seen as a key avenue for the company to commercialize its AI technology. As of this writing, Alibaba's US-listed stock was down 4.11% in pre-market trading.