TECH

Alibaba’s Profit Plunges as E-Commerce Business Falters, AI Investment Jumps

Published: Aug. 21, 2026 2:23 p.m. GMT+8

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Alibaba Group Holding Ltd. reported a 75% plunge in net profit for the second quarter of 2026, as contraction in its core e-commerce business and increased spending on AI weighed on earnings.

In the three months through June, Alibaba’s net profit was 10.4 billion yuan ($1.5 billion) on revenue of 269 billion yuan, up 9% year-on-year, according to its latest financial report released on Thursday.

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Alibaba net profit plunged 75% to 10.4 billion yuan in Q2 2026, despite 9% revenue growth to 269 billion yuan, due to e-commerce contraction and 75% capex surge.
China e-commerce revenue fell 8% to 110.9 billion yuan; international e-commerce dropped 1% to 27.8 billion yuan, its first decline since 2019.
AI cloud revenue rose 45% to 48.4 billion yuan, with AI product revenue achieving triple-digit growth for 12th consecutive quarter. CFO cited tech spending for profit decline.

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Who’s Who

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What Happened When

Second quarter of 2026 (three months through June 2026)：: Alibaba reported a 75% plunge in net profit to 10.4 billion yuan on revenue of 269 billion yuan (up 9% year-on-year). Capital expenditure surged 75% year-on-year to 67.7 billion yuan.

June 30, 2026 (quarter ended)：: Revenue from China e-commerce business was 110.9 billion yuan (down 8% year-on-year), and international e-commerce business revenue was 27.8 billion yuan (down 1% year-on-year).

Earlier in August 2026：: Alibaba opened public testing of QwenWork, an enterprise AI agent.

As of August 2026：: Annualized recurring revenue from model and application services surpassed 16 billion yuan.

August 21, 2026 (Thursday)：: Alibaba released its latest financial report for the second quarter of 2026.

2026：: Overall revenue of Alibaba E-commerce Group rose 4% year-on-year to 205.9 billion yuan. Revenue from AI cloud and compute services was 48.4 billion yuan (up 45% year-on-year). AI-related product revenue achieved 12.4 billion yuan (twelfth consecutive quarter of triple-digit growth). Alibaba's Zhenwu M890 AI processor adopted by over 650 clients. AI labs and applications segment generated 3.3 billion yuan in revenue (up 16% year-on-year) but had adjusted EBITA loss of 13.9 billion yuan.

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