Alibaba Group (NYSE:BABA) shares moved higher after the Chinese eCommerce giant reported fiscal second quarter results that exceeded revenue expectations, driven by strong growth in its cloud and AI businesses despite a sharp drop in profitability.
Revenue for the quarter ended September 30, 2025, reached RMB 247.8 billion (US$34.8 billion), up 5% year-over-year, slightly above estimates of 245.2 billion (US$34.22 billion.)
Adjusted earnings per share (EPS) were RMB 4.36, missing estimates of 6.03. Earnings per American Depository Share (ADS) were US$0.61, below the consensus US$0.81.
The lower-than-expected earnings reflect continued investments in growth areas and macroeconomic pressures in China.
“We are re-investing our profits and free cash flow for the future while near-term profitability is expected to fluctuate,” Alibaba CEO Eddie Wu said in a statement. “With our significant strategic investments in these areas, our two core businesses of AI + Cloud and consumption continued to deliver strong growth this quarter.”
Alibaba’s Cloud Intelligence Group revenue climbed 34% year-over-year to RMB 39.8 billion, exceeding analyst estimates, while AI-related products achieved triple-digit growth.
The company said strategic investments in AI and cloud infrastructure, totaling roughly RMB 120 billion over the past year, supported this expansion.
In its e-commerce operations, Alibaba China E-commerce Group reported gains in its quick commerce segment, with higher fulfillment efficiency, stronger customer retention, and increased average order value.
Customer management revenue grew 10% year-over-year, aided by a growing user base and expanded adoption of services on the Taobao platform.
Alibaba’s US-listed shares were up 2.8% pre-market on Tuesday.