# Alibaba reports 75% profit drop amid increased AI spending > Source: > Published: 2026-08-20 11:06:44+00:00 Via logodix.com # Alibaba reports 75% profit drop amid increased AI spending Revenue grew 9% to nearly $40B, but the Chinese tech giant's net income cratered as its AI infrastructure bet weighs heavily on the bottom line. 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 Douyin, which have been chipping away at Alibaba’s dominance in Chinese online retail. The 9% revenue growth is respectable in that context, but it’s a far cry from the double-digit surges that defined Alibaba’s growth era. ## The broader AI spending debate Microsoft, Google, Amazon, and Meta have all dramatically increased their capital expenditure on AI-related projects. Alibaba’s situation is arguably more acute because it’s fighting on two fronts simultaneously: defending its e-commerce position while building out cloud and AI services. For context, Alibaba’s $1.5B in quarterly net income still represents a profitable company by most standards. Several consecutive quarters of profit compression signal that this isn’t a one-time adjustment — it’s a structural shift in how Alibaba allocates capital. **Disclosure:** This article was edited by Editorial Team. For more information on how we create and review content, see our [Editorial Policy](https://cryptobriefing.com/editorial-policy/).