Alibaba shares fall as AI spending drives 75% drop in net income

JUST IN: Alibaba's net income plunges 75% in the June quarter as AI spending surges, sending its US-listed shares lower in premarket trading.

Alibaba's profit just fell seventy five percent in a single quarter. Not a typo, seventy five.

And here's the part that makes it interesting. The company isn't losing money because business is bad, it's spending money like the AI race depends on it, because it does. Capital expenditure jumped seventy five percent to ten billion dollars, chips, compute, the whole shopping list. Revenue actually rose nine percent, and the cloud division grew forty five percent.

CEO Eddie Wu says AI product revenue has now grown triple digits for twelve straight quarters, and he's calling Alibaba's position superior. Wall Street heard that and still sold, shares dipped four percent premarket before clawing most of it back.

So this is the trade of the decade in one earnings report. Burn profits today, own the compute tomorrow. Microsoft made that bet and won. Alibaba just pushed most of its chips, literally, onto the same square.

This is Liu Yang, reporting for HIT.

Source Read the original reporting at cnbc.com