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Investing.com -- Alibaba reported second-quarter top and bottom line that missed analyst expectations. However, the tech giant’s shares surged as AI strength fueled acceleration in its cloud unit.
The stock was up around 9% following the market open on Friday as of 09:37 ET (13:37 GMT)
Alibaba posted earnings of 14.75 yuan per share, missing analyst estimates of 15.47 yuan. Revenue came in at 247.7 billion yuan, below the consensus forecast of 253.8 billion yuan.
Alibaba reported a 78% jump in net income, helped by gains from equity investments and the sale of its Turkish unit Trendyol, though this was partly offset by weaker operating income.
Excluding those investment gains, profit would have fallen 18% from a year earlier as the company stepped up spending in China’s highly competitive instant commerce market.
Cloud computing remained a key growth driver, with revenue rising 26% to 33.4 billion yuan, accelerating from 18% growth in the prior quarter. The division, central to Alibaba’s AI ambitions, also posted a 26% increase in adjusted EBITA.
“This quarter, our strategic focus on consumption and AI + Cloud delivered strong growth. Our decisive investment in the quick commerce business achieved key milestones as we won consumer mindshare," said Eddie Wu, Chief Executive Officer of Alibaba Group.
"Our core businesses delivered strong revenue growth. Customer management revenue grew 10% and revenue from Cloud Intelligence Group grew 26%, with AI-related product revenue achieving triple-digit growth for the eighth consecutive quarter," he added.
Alibaba’s main e-commerce division, which generates over half of total revenue, delivered uneven performance in the quarter. Revenue climbed 10% to 19.6 billion yuan, supported by a 10% increase in customer management revenue—the fees merchants pay for marketing and related services—which remains the largest contributor.
Meanwhile, Alibaba’s quick commerce arm generated 14.8 billion yuan ($2 billion), up 12% from a year earlier.
For the three months ended June 30, 2025, revenue from the AIDC division rose 19% year-on-year to 34.7 billion yuan ($4.85 billion), supported by strength in cross-border businesses.
Revenue in the All Others segment declined by 28% to 58.6 billion yuan.
"Alibaba reported results with total revenue 2.2% and 1.8% below consensus and our estimates respectively on softer than expected All Others," Jefferies analysts said.
Alibaba’s overall adjusted EBITA for the quarter declined by 14% year-over-year to 38.8 billion yuan.