Alibaba Profit Drops 18% as China Slowdown and AI Spending Hit Tech Giant

Chinese technology giant Alibaba has reported a sharp decline in annual profit, as weak consumer spending in China and rising investments in artificial intelligence continue to weigh heavily on the company’s finances.

The Hangzhou-based e-commerce and cloud computing powerhouse said its net profit fell by 18 percent in the fiscal year ending March 31, highlighting the growing pressure facing China’s biggest tech firms amid an uncertain economic climate.

In a filing submitted to the Hong Kong Stock Exchange on Wednesday, Alibaba disclosed that profit dropped to 105.9 billion yuan, equivalent to about $15.6 billion, compared to 129.5 billion yuan recorded in the previous financial year.

The company attributed the decline partly to persistent weakness in China’s domestic economy, where cautious consumer spending and a struggling property market have continued to slow business activity across several sectors.

Alibaba has also ramped up spending on artificial intelligence infrastructure and technology development as competition intensifies among global tech companies racing to dominate the fast-growing AI industry.

The aggressive AI push comes as Chinese firms attempt to challenge major American rivals in areas such as generative AI, cloud computing and smart digital services. Analysts say the investment drive could place short-term pressure on earnings while positioning the company for long-term growth.

Despite the weaker profit performance, Alibaba continues to maintain a dominant position in China’s e-commerce sector through platforms such as Taobao and Tmall, while also expanding its cloud computing and international business operations.

The latest earnings report reflects the broader challenges facing China’s technology sector, where regulatory uncertainty, slower economic growth and costly innovation battles are reshaping the fortunes of some of the country’s largest corporations.