Chinese retailer Alibaba Group Holding’s results for the March quarter came under analysts’ expectations, leading to an 8% decline in its US-listed shares.
A slowdown in Chinese spending is affecting the company’s performance. The company also faces intense competition on the AI front.
On Thursday, the stock was trading down 8% at $123.06.
Alibaba’s results
Alibaba’s Q4 revenue increased by 7% from the previous year to 236.5 billion yuan ($32.8 billion).
Analysts expected the company’s revenue to come to 237.2 billion yuan.
The company’s net income to 12.38 billion yuan, as it gained from mark-to-market changes from its equity investments.
Mark-to-market is an accounting practice where the value of goods is based on the market price rather than their original price.
Taobao and Tmall, the digital retail business arms, posted a 12% increase in customer management revenue to 71 billion yuan.
Alibaba attributed the increase to the improvement in the take rate from the previous year.
Alibaba International Digital Commerce Group had a 22% growth in revenue to 33.5 billion yuan, powered by strong performance in cross-border business.
The company’s cloud intelligence arm also posted an 18% increase in revenue to 30.1 billion yuan.
It said there was faster public cloud revenue growth, with more adoption of AI-related products.
China’s consumption slump hurts Alibaba
A challenging economic condition in China, due to the property crisis and bleak economic outlook, has forced Chinese customers to cut down on spending.
Recently, China and the US have decided to scale back tariffs that were slapped by US President Donald Trump on Liberation Day and following Chinese retaliatory tariffs.
Chinese retail companies have been trying to stimulate spending by offering discounts and low prices.
Alibaba’s rival JD.Com in its quarter results had beaten revenue estimates and said it saw stronger user growth, said a Reuters report.
Alibaba is also battling for market share with other Chinese rival PDD.
AI investments
Alibaba had also entered the AI fray, competing with Chinese rival Deepseek.
The company launched a new model, R1-Omni, in March, claiming it is better than OpenAI’s ChatGPT.
The company said the new model could read emotions.
Apple had partnered with Alibaba for AI integration in China. In April, the company launched the Qwen 3 model, which powers Alibaba’s AI assistant Quark.
Alibaba CEO Eddie Wu, in an earnings call, said the company sees a crucial growth track for revenue through the cloud business model.
The Alibaba stock price is still strong
Despite Thursday’s decline, the company’s shares have gained 45% in the year so far.
UBS maintained a buy rating with a target price of $180 for the stock despite the earnings miss.
The research firm said the core commerce trends are stable, and non-core segments are narrowing losses.
UBS analyst Kenneth Fong said the triple-digit growth in AI-related revenue helped shrug off the weakness in margin softness.
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