Alibaba Group Holding Limited American Depositary Shares each representing eight Ordinary share
BABA · NYSE
Next quarter
Expected to report Nov 24, 2026 — estimated from last year’s reporting date.
Consensus is $1.42 EPS for Sep 2026 across 3 estimates, ranging $0.81 to $2.16.
BABA Jun 2026
- 43.26%
- $1.78
- $1.01
- —
- —
Highlights
- Earnings miss: Reported EPS was 1.01 versus consensus of 1.78, a 43.26% shortfall.
- Revenue: June-quarter revenue rose 9% year over year to RMB268.953 billion (US$39.639 billion).
- Cloud acceleration: AI Cloud and Compute Services revenue increased 45% to RMB48.437 billion, while adjusted EBITA more than doubled to RMB5.628 billion and reached a 12% margin.
- AI investment: AI Labs and Applications widened its adjusted EBITA loss to RMB13.861 billion from RMB3.224 billion, reflecting higher AI investment and Qwen app inference costs.
- Profit pressure: Adjusted EBITA fell 30% to RMB27.329 billion, and non-GAAP net income declined 38% to RMB20.715 billion.
- E-commerce mix: China Quick Commerce revenue grew 45% to RMB53.295 billion, but China E-commerce revenue fell 8% to RMB110.900 billion and customer management revenue declined 7%.
- Capital intensity: Capital expenditures rose 75% year over year to RMB67.678 billion, driving free cash flow outflow of RMB44.670 billion versus an RMB18.815 billion outflow a year earlier.
- Reported profit: Net income attributable to ordinary shareholders dropped 76% to RMB10.537 billion, including RMB4.458 billion of goodwill impairment and a provision for a EUR550 million European Commission fine.
- Liquidity and buybacks: Cash and other liquid investments were RMB474.505 billion at June 30, down RMB46.319 billion from March 31; Alibaba repurchased US$162 million of shares during the quarter.
Analysis
Alibaba’s June 2026 quarter was a revenue-growth and AI-infrastructure investment print, but it missed earnings expectations sharply. Reported EPS of 1.01 was 43.26% below the 1.78 consensus supplied, while the release reported diluted EPS of RMB0.46 per ordinary share and non-GAAP diluted EPS of RMB1.07. Revenue grew 9% year over year to RMB268.953 billion, but adjusted EBITA fell 30% to RMB27.329 billion and non-GAAP net income fell 38% to RMB20.715 billion. GAAP net income attributable to ordinary shareholders declined 76% to RMB10.537 billion, versus RMB43.116 billion a year earlier.
The defining positive was Cloud: AI Cloud and Compute Services revenue accelerated 45% to RMB48.437 billion, AI-related product revenue reached RMB12.376 billion with triple-digit growth for the twelfth consecutive quarter, and adjusted EBITA rose 133% to RMB5.628 billion. The offset was the cost of building the AI stack. Capital expenditure rose 75% to RMB67.678 billion, leaving free cash flow at a RMB44.670 billion outflow. Commerce was mixed, with China Quick Commerce revenue up 45% but China E-commerce revenue down 8%. The supplied release does not provide a March-quarter income statement, so a quantified prior-quarter comparison for revenue or earnings is unavailable; liquid investments nonetheless fell RMB46.319 billion from March 31.
AI cloud monetisation
- Growth: AI Cloud and Compute Services revenue rose 45% year over year to RMB48.437 billion, with external revenue also growing 45%.
- AI products: AI-related product revenue reached RMB12.376 billion and delivered triple-digit year-over-year growth for the twelfth consecutive quarter.
- Operating leverage: Segment adjusted EBITA increased 133% to RMB5.628 billion, implying an adjusted EBITA margin of approximately 12%, versus roughly 7% a year earlier.
- Infrastructure position: Alibaba combined Cloud Intelligence Group and T-Head into AI Cloud and Compute Services. T-Head’s Zhenwu chips had more than 650 external customers across over 20 industries through Alibaba Cloud services.
AI investment burden
- Group profitability: Adjusted EBITA declined 30% to RMB27.329 billion, with the margin falling to 10% from 16% a year earlier. Management attributed the decline primarily to technology investment, partly offset by Cloud improvement and efficiency gains elsewhere.
- AI applications: AI Labs and Applications revenue rose 16% to RMB3.338 billion, but its adjusted EBITA loss widened to RMB13.861 billion from RMB3.224 billion as Alibaba invested in AI capabilities and absorbed higher Qwen app inference costs.
- Capital expenditure: Capex increased 75% to RMB67.678 billion, driven by additional CPU-compute capacity, procurement-cycle fluctuations and higher chip-component prices.
- Cash conversion: Operating cash flow rose 11% to RMB22.945 billion, but free cash flow deteriorated to a RMB44.670 billion outflow from an RMB18.815 billion outflow, mainly because of cloud infrastructure spending.
China commerce reset
- Core marketplace: China E-commerce revenue decreased 8% to RMB110.900 billion. Customer management revenue fell 7%, although it would have grown 1% on a like-for-like basis excluding the contra-revenue effect of the new business development program.
- Quick commerce: China Quick Commerce revenue increased 45% to RMB53.295 billion, led by Taobao Instant Commerce and Freshippo. Taobao Instant Commerce improved unit economics through higher average order value, better fulfillment efficiency and a greater mix of high-value food and non-food orders.
- Customer engagement: 88VIP membership rose at a double-digit rate to approximately 64 million as of June 30.
- Segment profit: Alibaba E-commerce Group adjusted EBITA was broadly stable, down 1% to RMB39.749 billion, as greater spending on user experience and technology offset operating improvements.
International commerce
International E-commerce revenue declined 1% year over year to RMB27.761 billion, while Global Wholesale revenue grew 7% to RMB13.906 billion. AliExpress reached operating profit during the quarter, supported by logistics optimisation and cost efficiencies. Alibaba also said the share of AliExpress sales sourced from local products continued to increase, helping diversify the platform’s supply base.
Charges and reported profit
- Operating income: Income from operations fell 57% to RMB15.161 billion, with the operating margin declining to 6% from 14%.
- One-time items: The quarter included RMB4.458 billion of goodwill impairment related to businesses in All Others and a provision tied to the European Commission’s EUR550 million Digital Services Act fine.
- Investment income: Net interest and investment income fell 48% to RMB9.004 billion as gains from investment disposals and mark-to-market changes declined.
- Bottom line: Net income fell 75% to RMB10.444 billion, while diluted earnings per ADS declined 79% to RMB3.71. Non-GAAP diluted earnings per ADS fell 42% to RMB8.52, reflecting the underlying investment burden even after excluding specified items.
New reporting structure
Alibaba reorganised its disclosures around four businesses: Alibaba E-commerce Group, AI Cloud and Compute Services, AI Labs and Applications, and All Others. The changes combine domestic and international commerce operations, merge Cloud with T-Head, and bring the Qwen model, consumer and enterprise application businesses together. The structure is intended to show synergies across commerce and the full AI stack, but it also makes the increased spending on AI applications more visible: All Others swung to a RMB3.343 billion adjusted EBITA loss from a RMB687 million profit a year earlier.
