Alibaba reports 75% profit drop amid increased AI spending

Alibaba just posted a quarter that perfectly captures the tension at the heart of Big Tech right now: revenue up, profits down, and a massive AI bill sitting on the table. The Chinese e-commerce giant reported net income of RMB 10,444 million (roughly $1.5B) for the quarter ending June 30, a 75% collapse compared to the same period last year. Revenue, meanwhile, climbed 9% year-over-year to RMB 268,953 million, or about $39.6B. The AI spending paradox Alibaba has been plowing capital into artificial intelligence infrastructure, with both the March and December periods showing similar profit compression. The 75% decline wasn’t solely about AI spending, though. Alibaba pointed to reduced income from operations, fewer gains from investment disposals, and mark-to-market adjustments on equity investments as contributing factors. Net income attributable to ordinary shareholders came in at RMB 10,537 million ($1.55B) for the quarter. The earnings release dropped on August 20, following a board review completed the day before. Competition sharpens the pressure Alibaba’s core e-commerce business faces pressure from competitors like PDD Holdings (Pinduoduo’s parent), JD.com, and ByteDance’s ...