Signage at the Alibaba Group Holding Ltd. offices in Beijing, China, on Wednesday, March 29, 2023. Alibaba’s overhaul could serve as a template for a restructuring of China Tech itself: a shake-up that achieves Beijings aim of carving up the countrys tech titans while unlocking potentially billions of dollars in pent-up shareholder value.
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Chinese e-commerce titan Alibaba on Thursday beat expectations on the top and bottom line in its December quarter, citing ongoing strength in its Cloud Intelligence unit.
Alibaba said net income hit 48.945 billion yuan ($6.72 billion) in the quarter ended Dec. 31, compared with an LSEG forecast of 40.6 billion yuan.
Revenue came in at 280.154 billion yuan, versus analyst expectations of 279.34 billion yuan.
The company’s stock has surged by around 50% on both the New York and Hong Kong exchanges in the year to date.
“This quarter’s results demonstrated substantial progress in our ‘user first, AI-driven’ strategies and the re-accelerated growth of our core businesses,” said Alibaba CEO Eddie Wu in a statement accompanying the results.
“Our Cloud revenue growth reignited to double digits at 13%, with AI-related product revenue achieving triple-digit growth for the sixth consecutive quarter. Looking ahead, revenue growth at Cloud Intelligence Group driven by AI will continue to accelerate.”
U.S.-listed shares of the company were up 6.6% at 06:45 ET in premarket trading, shortly after the release of the results.
Tech in focus
Alibaba’s Cloud Intelligence Group posted year-on-year sales growth of 13% to 31.742 billion yuan in the three months to the end of December.
The retail giant’s tech activities are being closely watched by investors after the announcement of the Chinese company’s partnership with Apple to roll out AI features for iPhones sold in Chinese.
Market focus has sharpened on Chinese tech developments following the revolutionary late-January release of local startup DeepSeek’s new AI model, which the company claims is more efficient and affordably produced than sector-leading U.S. counterparts. Alibaba, which first made inroads into AI with the launch of its own ChatGPT-style product Tongyi Qianwen (Qwen) in 2023, earlier this year rolled out a new Qwen 2.5 version of its technology that it claimed exceeds the DeepSeek model, according to Reuters.
Alibaba’s outspoken founder Jack Ma, who has largely kept out of the public eye since 2020, was among the entrepreneurs who attended a rare closed-door meeting headed by Chinese President Xi Jinping on Monday, during which the Beijing leader urged private businesses to “show their talents” and strengthen their confidence in a “new era” for their activity.
Sales
Alibaba’s key business units, Taobao and Tmall Group, posted an annual 5% uptick in revenue to 136.091 billion yuan in the December quarter, amid ongoing questions over consumer sentiment in the world’s second largest economy.
The latest data indicate that Chinese retail sales jumped by a better-than-expected annual 3.7% in December, as Beijing set out to combat a protracted real estate slump with a spate of stimulus measures – including interest rate cuts and a five-year fiscal package worth $10 trillion yuan. Some analysts have warned of ongoing weakness in consumer spending, but consumer inflation nevertheless accelerated to its fastest in five months in January.