Alibaba shares jump as AI cloud surge offsets mixed quarterly results Proactive uses images sourced from Shutterstock
Alibaba Group (NYSE:BABA) shares climbed nearly 7% in early Wednesday trading after the Chinese e-commerce and technology giant reported fourth-quarter fiscal 2026 results that showed accelerating momentum in cloud and artificial intelligence, even as heavy investment spending weighed on profitability.
At first glance, the results appeared worrying. Revenue for the quarter came in at $35.3 billion, up 3% from a year earlier but slightly below analyst estimates of $35.8 billion.
Adjusted earnings per share fell to $0.09, well below the roughly $0.83 consensus estimate, as investments in AI infrastructure and quick-commerce operations compressed margins.
Free cash flow turned negative, coming in at negative $2.51 billion.
But investors focused on the standout figure from Cloud Intelligence Group, which posted revenue of $6.04 billion, a 38% year-over-year increase, with external customer revenue accelerating to 40% growth.
AI-related cloud products accounted for 30% of that external revenue and have now delivered triple-digit year-over-year growth for 11 consecutive quarters, reaching $1.30 billion in the period.
The adjusted EBITA for the cloud unit reached $550 million, up 57%, signaling improving unit economics even as Alibaba continues to pour capital into AI development.
Quick commerce, another area of heavy investment, generated $2.9 billion in revenue, a 57% jump, while its adjusted EBITA loss narrowed sharply to negative $20 million from negative $518 million a year earlier.
China e-commerce, Alibaba’s core domestic retail business, contributed $17.72 billion in revenue, up 6%, while the international digital commerce segment generated $5.14 billion, also up 6%. The company’s 88VIP loyalty membership base grew to over 62 million members, up double digits year over year.
Alibaba ended the quarter with $75.5 billion in cash and liquid investments. The company announced an annual dividend of $1.05 per ADS, representing an aggregate payout of approximately $2.5 billion.