Alibaba Group appears caught between a rising star division and a rapidly sinking bottom line as its push into artificial intelligence and cloud computing collides with heavy losses in on-demand food delivery and quick-commerce services.
On the positive side, Alibaba’s cloud business has surged – cloud and AI-related sales rose 34 % year-on-year to roughly 39.8 billion yuan in the most recent quarter – validating the company’s aggressive investment into AI infrastructure. The firm is positioning itself among a small number of global full-stack AI providers, supported by open-source models and strong demand for AI-powered cloud services.
Yet, those gains have been overshadowed by a costly price war in China’s one-hour delivery and quick-commerce market, where Meituan and JD.com are fierce rivals. Subsidies, discounts and operational burn have severely pressured profitability – overall operating income plunged, and adjusted operating profit dropped about 78 %. What this means is that the cash flow from e-commerce and delivery – traditionally funding Alibaba’s new ventures – is under strain just when AI investment demand is high.
The company now faces what can best be described as a two-front war: defending its online retail and quick-commerce base, while scaling up AI and cloud infrastructure to meet ambitious, long-term goals. If the delivery-sector losses continue, Alibaba’s financial buffer may erode just as its AI ambitions require more capital. The tension raises a pressing question: can Alibaba sustain this dual push without sacrificing long-term stability, or will short-term losses undermine its bid to lead China’s AI transformation?
