Alibaba reports fiscal first-quarter earnings Thursday morning, before U.S. markets open. The stock has had a strong run into results, rising 36% in Hong Kong this quarter alone, its best quarterly outperformance against Tencent since early 2025.
Alibaba Group Holding Limited, BABA
In Hong Kong, the stock rose as much as 2.3% on Thursday ahead of the print. That said, BABA’s American depositary receipts have fallen around 13% year to date, so the picture is mixed depending on where you’re looking.
Analysts polled by FactSet expect net profit to come in at 21.8 billion yuan ($3.23 billion) for the three months ended June. That would be a sharp drop from 43.12 billion yuan in the same period a year ago.
The profit decline is tied to heavy spending across AI, cloud, and quick commerce. That spending is deliberate, not accidental.
Revenue tells a different story. Analysts forecast 266.78 billion yuan for the quarter, up from 247.65 billion yuan a year ago. Bloomberg data puts that at 8.4% growth, which would be the fastest pace in nearly three years.
Cloud computing is the number to watch. Alibaba holds an estimated 37% share of China’s cloud market as of Q4 2025, according to research firm Omdia. Huawei sits at 17%, Tencent at 10%. That gap matters.
JPMorgan analyst Alex Yao wrote that earnings may come in “better than feared,” pointing to narrower losses in food delivery and quick commerce, plus revenue acceleration and margin improvement in cloud.
Citigroup analyst Alicia Yap noted that companies with “full-stack capabilities, from chips and cloud infrastructure to models and applications” are better positioned long-term, naming Alibaba directly.
The company designs some of its own chips and offers products ranging from the Qwen consumer app to enterprise coding tools and AI agents.
Alibaba’s open-weight Qwen models have been gaining traction globally, helped by a broader rush toward China’s cheaper AI offerings.
The AI pivot has helped Alibaba shed its image as a struggling e-commerce company and reposition as a technology platform.
“Alibaba’s AI investments have been effective in reviving both investor interest in the stock and user engagement across its broader ecosystem,” said Gary Tan, portfolio manager at Allspring Global Investments.
Alibaba is now trading at a consistent valuation premium to Tencent for the first time in more than a decade, a shift traders have been pricing in as the AI strategy gains credibility.
The company recently agreed to sell its Lingxi Games unit to Asian private-equity firm Trustar Capital for at least $1.5 billion, freeing up capital for further AI investment.
Tencent and Baidu both saw their stocks fall after recent earnings disappointed. Alibaba heads into its print with the market watching to see if it can avoid the same fate.
The key metrics to watch are cloud revenue growth and the pace of quick-commerce losses narrowing.
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