Alibaba revenue tops estimates with strong instant retail, AI push

Chinese e-commerce giant Alibaba beat analysts’ estimates for quarterly revenue on Tuesday as investments in one-hour delivery helped drive more users to its shopping apps, while its cloud division reported strong growth.

U.S.-listed shares of the company rose four per cent in premarket trading.

The company reported revenue of 247.80 billion yuan (US$34.97 billion) in the second quarter, compared with estimates of 242.65 billion yuan, according to data compiled by LSEG.

Battle over ‘instant retail’ sector

Alibaba’s results come against the backdrop of a costly battle in China’s “instant retail” sector - which Alibaba calls “quick commerce” - where major players are pouring billions into one-hour delivery services to capture market share.

At the same time Alibaba has been investing heavily in artificial intelligence, emerging as one of China’s leaders in the field.

“We have entered into an investment phase to build long-term strategic value in AI technologies and infrastructure, and a consumption platform integrating daily life services and e-commerce,” said Alibaba Group CEO Eddie Wu.

Net profit fell 53 per cent to 20.61 billion yuan, though that was still higher than analysts had expected.

The instant retail price war, triggered by aggressive discounting and subsidies from Alibaba, JD.com and Meituan has led to heavy cash burn — analysts at Nomura estimate over $4 billion industry-wide in the second quarter alone — and raised investor concerns about margins.

Alibaba is less exposed than rivals, yet it sees long-term upside, projecting instant retail could add 1 trillion yuan in annualized gross merchandise value - or GMV, a commonly used metric for e-commerce sales - over the next three years.

Heavy subsidies for singles’ day

China’s Singles’ Day sales period - the longest on record, stretching from early October to November 11 - also saw retailers roll out heavy subsidies and discounts to spur demand.

Sales across major platforms reached 1.70 trillion yuan, up from 1.44 trillion yuan last year, according to data provider Syntun.

Alibaba continued to push overseas expansion during the event. Its Taobao marketplace launched Singles’ Day promotions in more than 20 countries.

The company overall saw 9.3 per cent sales growth from the event, while rival JD.com saw 8.3 per cent, according to tech and commerce consulting firm Analysys.

Alibaba has been making aggressive moves to expand into the consumer artificial intelligence market, an area in which it has traditionally lagged rivals as it focused instead on enterprise clients.

Recently it launched a free app built on the latest version of its Qwen large language model, which surpassed 10 million downloads within its first week. It still has a long way to go to catch market leader ByteDance’s Doubao, which has 150 million users.

Alibaba’s consumer-facing shift comes amid an intensifying price war in China’s domestic AI market, sparked by DeepSeek’s focus on low-cost computing and app development — a strategy that has forced rivals to slash prices and follow suit.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Anil D’Silva and Jan Harvey)