Chinese e-commerce and tech giant Alibaba has reported an 18 percent drop in annual net profit, as the company grapples with a slowing domestic economy and heavy spending on artificial intelligence (AI) expansion.
For the fiscal year ended March 31, Alibaba recorded a net profit of 105.9 billion yuan ($15.6 billion), down from 129.5 billion yuan in the previous year, according to a statement released on the Hong Kong Stock Exchange.
The company attributed the decline to intense competition in China’s e-commerce market, price wars, and weak consumer spending in the world’s second-largest economy.
Despite the profit fall, revenue in the final quarter rose by 3 percent year-on-year to 243.4 billion yuan, showing modest growth in parts of its business.
Alibaba, which operates major online retail platforms in China, has been investing tens of billions of dollars into AI development, a strategy that continues to weigh on short-term profitability.
Chief Executive Officer Eddie Wu said the company’s “full-stack AI investments have progressed from incubation to commercialisation at scale,” adding that Alibaba is seeing “accelerated breakthroughs across models, cloud infrastructure, and applications.”
The firm’s open-source Qwen AI models have gained global attention, and Alibaba recently integrated upgraded agentic AI features into its Taobao shopping platform, enabling more automated user services.
Wu also noted that the company sees “massive potential for agentic AI,” signalling continued aggressive investment in the sector despite financial pressure.
Analysts had earlier predicted that Alibaba would deepen its AI integration strategy into 2027, even if it requires sustained high spending to drive user adoption.
Reports also indicate that Alibaba is in discussions with other tech firms, including Tencent, about potential investment in AI startup DeepSeek, which is reportedly valued at up to $50 billion.
Alibaba has faced a challenging period following China’s regulatory crackdown on the tech sector that began in 2020, which significantly affected its market influence and leadership dynamics.
Although co-founder Jack Ma is no longer in an executive role, he remains a major shareholder and recently re-emerged publicly in 2025 during a high-level meeting with Chinese President Xi Jinping.
Despite its ongoing AI push, Alibaba’s shares have struggled this year, even as global investment in artificial intelligence continues to surge.
