Alibaba said it’s working on a rival to ChatGPT, the unreal intelligence chatbot that has caused excitement around the globe. Alibaba said its own product is currently being tested internally.
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Shares of Ali Baba fell sharply on Tuesday after the Chinese tech giant’s net profit slumped in its fiscal fourth quarter.
Here’s how Alibaba performed within the March quarter in comparison with LSEG’s consensus estimates:
- Revenue: 221.9 billion yuan ($30.7 billion) versus expected 219.66 billion yuan.
Net profit attributable to common shareholders was 3.3 billion yuan, down 86% year-on-year.
Shares of Alibaba fell about 5% in premarket trading within the U.S. on Tuesday
Alibaba had a difficult 12 months in 2023 as the corporate implemented its largest corporate structural reform up to now. In addition, several high-profile executive changes have been made, with company veteran Eddie Wu taking the helm of the corporate as CEO in September.
To signal confidence to shareholders, the Chinese tech giant announced earlier this 12 months that it had increased its share buyback program by $25 billion through the tip of March 2027.
Alibaba has struggled with cautious consumer spending in China but saw signs of a modest recovery in its core e-commerce business within the March quarter.
The Hangzhou-based company has ramped up its overseas operations amid a slowdown at home, where Alibaba has faced increasing competition from low-cost players akin to PDD.
Sales on the Taobao and Tmall division, which houses Alibaba’s e-commerce business in China, rose 4% year-on-year to 93.2 billion yuan. That was faster than the two% growth within the previous quarter.
Customer management revenue — which is revenue from services akin to marketing that Alibaba sells to merchants on its e-commerce platforms Taobao and Tmall — rose 5% 12 months over 12 months after being flat within the previous quarter. Alibaba’s international trading business also saw revenue rise 45% year-on-year to 27.4 billion yuan.
Earlier this 12 months, CEO Wu promised to “re-stimulate” the e-commerce company’s growth through further investment. There seem like early signs that this can take hold within the March quarter.
“This quarter’s results demonstrate that our strategies are working and we are returning to growth,” Wu said within the earnings release.
The decline in profits casts a protracted shadow over the result. Alibaba said the explanation for the decline was “primarily due to a net loss on our investments in listed companies during the quarter, compared to a net profit in the same quarter last year due to the mark-to-market changes.”
Alibaba promotes AI growth
Investors are laser-focused on Alibaba’s cloud computing division, which is struggling to reignite growth. The company had planned to spin off the cloud unit but scrapped plans for an IPO last 12 months.
Alibaba said its cloud computing division generated revenue of 25.6 billion yuan, up just 3% year-on-year and the identical growth rate because the previous quarter.
The Chinese giant said it’s within the strategy of reducing “low-margin project-based” contracts in its cloud division and expects artificial intelligence and public cloud-related products aimed toward enterprise customers to “feel the impact of the roll-out contracts.” “would balance out”. from project-related income.”
In the March quarter, AI-related revenue saw “triple-digit year-over-year growth.”
“AI-related revenue was generated from various sectors, including basic model companies, internet companies, as well as customers in industries such as financial services and automobile,” Alibaba said.
