Alibaba Q2 revenue up 9%; profits fall

Alibaba reported a 9% year-over-year rise in Q2 2026 revenue to about 269 billion yuan, driven by AI-enabled cloud services and a longer 618 shopping festival. However, net income plunged roughly 75% to around 10.4–10.5 billion yuan as heavy investment in cloud infrastructure and technology weighed on profitability, while operating income also declined and adjusted EBITA fell about 30%. The cloud and compute segment saw revenue growth of about 45% to roughly 48.4 billion yuan, underscoring AI demand driving both cloud usage and company growth. The company continued aggressive capital expenditure, rising about 75% to roughly 67.7 billion yuan in the quarter as it expands AI infrastructure and models. Free cash flow turned negative despite improved operating cash flow, while Alibaba maintained a large cash position as it funds its cloud, e-commerce, and technology initiatives. Overall, the results reflect a strategy prioritizing AI and cloud investments to fuel longer-term expansion alongside near-term profit pressures.