Alibaba Group is accelerating investments in artificial intelligence, cloud computing and rapid-delivery ecommerce as it positions for what executives describe as a shift to an “agent-driven” digital economy.
Revenue for the company rose to $40.7 billion year over year in Alibaba’s fiscal Q3, which ended Dec. 31, 2025. That’s up 2% from $40.1 billion a year earlier. Net income fell to $2.2 billion, down 66% from $6.6 billion.
For the first nine months of its fiscal year, Alibaba revenue totaled $111.6 billion. That’s up 3% from $108.7 billion. Net income declined to $11.2 billion, down 31% from $16.3 billion in the same period last year.
Growth was driven by cloud and AI services, while core ecommerce remained under pressure from softer consumer demand.
What Alibaba is prioritizing with AI
What stood out most was Alibaba’s effort to more tightly connect AI development with enterprise workflows and digital commerce.
“This quarter, Alibaba maintained strong investments across our core pillars of AI and consumption,” CEO Eddie Wu said. “AI is and will continue to be one of our primary growth engines.”
On the earnings call, Wu said the company sees a fundamental shift underway.
“We’re now in the agent-driven era of AI development,” he said, according to a transcript published by Seeking Alpha. Wu added that success will require “tight integration between application and model.”
Why AI is important for Alibaba’s Cloud Intelligence Group
Alibaba’s Cloud Intelligence Group reported revenue growth of about 35% from external customers, with AI-related products delivering triple-digit growth for the 10th consecutive quarter.
The company said usage of its AI platform is accelerating rapidly. Token consumption on its model platform increased sixfold over the past three months, reflecting growing enterprise adoption of AI workloads.
Alibaba also outlined the scale of its AI ecosystem:
- Qwen large language models have surpassed 1 billion cumulative downloads.
- Consumer-facing Qwen applications now exceed 300 million monthly active users.
- More than 400 enterprise customers are running AI workloads on Alibaba infrastructure.
To support that growth, Alibaba is expanding its infrastructure stack, including proprietary AI chips. The company said it has shipped more than 470,000 AI chips, with over 60% deployed by external customers.
Alibaba’s long-term AI goals
Wu said the company’s long-term goal is to exceed $100 billion in combined cloud and AI revenue within five years, driven by model-as-a-service offerings and enterprise AI adoption.
“Tokens are a key component of their production inputs, not just a part of their IT budget,” Wu said. “So this is the most fundamental long-term factor that we see driving future AI growth.”
Meanwhile, Alibaba is also pushing deeper into enterprise AI with new platforms designed to automate business workflows.
Wu highlighted the launch of Wukong, an enterprise AI agent platform that integrates with corporate data systems and enables AI-driven task execution.
He said the company expects AI agents to increasingly handle end-to-end processes across industries, creating demand for both public cloud services and private enterprise deployments.
“We see massive value that we can provide and a huge total addressable market,” Wu said.
While AI is emerging as the primary growth engine, Alibaba’s ecommerce business is undergoing structural changes.
China ecommerce revenue grew modestly year over year, but the company’s quick-commerce segment — focused on rapid delivery of everyday goods — expanded much faster.
Quick-commerce revenue rose to about $2.9 billion, up 56% from a year earlier. The business is benefiting from higher order volume, improved fulfillment efficiency and rising average order value.
Wu said quick commerce is becoming central to Alibaba’s ecommerce strategy, helping drive customer acquisition and purchase frequency.
The company is targeting more than $138 billion in quick-commerce gross merchandise volume by fiscal 2028 and expects the segment to turn profitable around fiscal 2029.
“Quick commerce has become a cornerstone of our ecommerce business, playing a strategically vital role in the AI era by driving customer acquisition, enhancing user engagement, fulfilling diverse consumer demand, increasing transactions and improving monetization and supporting logistics infrastructure,” Wu said.
Why AI matters for ecommerce at Alibaba
Executives also said AI will play a growing role in ecommerce operations, from personalized recommendations to merchant tools and automated customer interactions.
“We believe that AI will allow us to make huge upgrades in ecommerce across different parts of the ecommerce business,” another executive on the call, who was not named, said.
Alibaba’s increased spending on AI and ecommerce weighed on profitability during the quarter.
Adjusted EBITA fell 57% year over year, while net income declined 66%, reflecting higher investment in technology, infrastructure, and customer acquisition.
The company said it is prioritizing long-term growth over near-term margins, particularly in AI and quick commerce.
Alibaba ended the quarter with about $42.5 billion in net cash, giving it flexibility to continue funding its expansion.
What Alibaba’s latest results show
Alibaba’s results underscore a broader shift across digital commerce and enterprise technology.
Executives said AI is moving beyond a support function and becoming embedded in core business operations, particularly in B2B workflows.
Wu emphasized that the next phase of growth will depend on integrating AI across infrastructure, applications, and commerce platforms.
“And I really need to emphasize that only when you have the most powerful models, can you truly drive the deployment of AI applications across all kinds of different industries,” he said.
For ecommerce sellers, the implications are significant: AI agents are beginning to reshape how transactions are executed, how customers are served and how businesses operate on a scale.
Alibaba’s strategy suggests that future competition in digital commerce will be defined less by traditional platforms and more by the intelligence embedded within them.
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