Alibaba Q2 revenue up as AI cloud surges

For the quarter ended June 30, 2026, Alibaba (9988.HK) generated revenue of RMB268,953 million, an increase of 9% compared with the same period a year earlier. The result underscores continued top-line expansion across the group, even as profitability metrics moved in the opposite direction.

Net income for the quarter was RMB10,444 million. While the company remained profitable, several key earnings measures weakened despite the revenue gain, reflecting rising costs and other pressures during the period.

A major contributor to Alibaba (9988.HK)’s performance was its AI Cloud and Compute Services business. Revenue from this segment reached RMB48,437 million in the quarter, up 45% year over year. The company linked this growth to stronger public cloud demand and broader adoption of AI-related products.

The surge in AI-focused cloud revenue highlights the increasing importance of compute-intensive services within Alibaba’s portfolio. The segment’s expansion provided a key engine for the group’s overall revenue increase during the June quarter.

Income from operations fell to RMB15,161 million, a 57% decline from the prior-year quarter. Adjusted EBITA, another measure of operating performance, decreased 30% to RMB27,329 million over the same period.

These figures indicate that Alibaba’s margins came under significant pressure, even as revenue advanced. The combination of weaker operating income and lower adjusted EBITA suggests that higher expenses, impairments, or other operating factors weighed on profitability during the quarter.

Alibaba sharply increased capital expenditures in the June quarter, investing RMB67,680 million. This represented a 75% rise compared with the same period a year earlier, marking a substantial step-up in spending.

The company stated that the increase in capital outlays was directed mainly toward expanding AI compute and related infrastructure. This investment supports the growth of its AI Cloud and Compute Services and reflects a strategic focus on scaling capacity for AI-driven workloads.

Taken together, the quarter’s results present a mixed picture for Alibaba. Strong demand for AI cloud and compute services is bolstering revenue and reinforcing the company’s position in high-growth, AI-related markets.

At the same time, the rapid build-out of AI infrastructure and other cost factors contributed to lower operating income and adjusted EBITA. The June-quarter performance therefore reflects a trade-off between near-term profitability and sustained investment in Alibaba’s AI and cloud capabilities.