Alibaba net income drops more than 75% amid AI investments
Alibaba just saw its net income drop by more than 75% this quarter, falling to $1.6 billion.
The main reason? Massive spending on artificial intelligence and cloud tech, even though revenue actually went up 9% thanks to strong demand for cloud services.
All that investment led to a free-cash outflow of more than $6.6 billion, showing how expensive the AI race is getting.
Eddie Wu targets $100B cloud AI
Alibaba's new Qwen AI models are helping it stand out in the market, but since they're offered at little or no cost, profits are taking a hit.
On top of that, China's weak consumer market has dragged down overall earnings and pushed US shares down by 4%.
Still, CEO Eddie Wu is doubling down on AI, rolling most of its AI-related research and product teams into Alibaba Token Hub and aiming for $100 billion in cloud and AI revenue within five years, even if it means blowing past its original budget.