Chinese tech giant Alibaba’s shares experienced a significant surge on Thursday after the company reported a remarkable 333% increase in net income and better-than-expected revenue gains in its key divisions of e-commerce and cloud services. Net income for the quarter ending in December rose to $6.36 billion (CNY 46.34 billion), more than triple the $1.5 billion recorded in the same period last year.
Following the announcement, Alibaba's US-listed stock rose 8.77%, reaching $136.8 as of 10:27 PM AST on Thursday. The stock surged by as much as 15% during early trading, hitting $144.51, its highest level since November 2021. Revenue for the quarter increased by 8% to $38.38 billion, while income from operations saw an impressive 83% year-over-year rise to $5.64 billion. This growth was largely attributed to a decrease in impairment of intangible assets and an increase in adjusted earnings before interest, taxes, and amortization (EBITA).
The company's better-than-expected results were driven by the strong performance of its cloud intelligence unit, which benefited from rising demand for artificial intelligence (AI) and enterprise cloud solutions. Other contributing factors included robust consumer spending, increased e-commerce engagement, cost-cutting measures, and improved monetization strategies.
Alibaba CEO Eddie Wu announced plans to invest more in AI and cloud computing over the next three years, though specific figures were not disclosed.
In terms of segment performance, Taobao and Tmall reported revenue growth of 5%. Customer management revenue increased by 9% year-over-year to $13.81 billion, driven by growth in online gross merchandise volume (GMV) and improvement in take rate year-on-year. Revenue from Alibaba International Digital Commerce (AIDC) rose 32% year-over-year to $5.17 billion, primarily due to the strong performance of cross-border businesses. This segment also increased investments during overseas shopping festivals and continued to invest in select European markets and the Gulf region to acquire users, which led to increased losses.
The Cloud Intelligence business experienced a 13% year-on-year revenue increase to $4.35 billion, driven by double-digit public cloud revenue growth and the growing adoption of AI-related products. Conversely, Cainiao Smart Logistics Network Limited's revenue dipped by 1% year-on-year to $3.87 billion due to ongoing restructuring of the company’s e-commerce businesses taking on certain logistics platform roles.
Revenue from the Local Services Group grew 12% year-on-year to $2.33 billion, driven by the combined order growth of Amap and Ele.me, as well as revenue growth from marketing services. Digital Media and Entertainment posted an 8% jump in revenue to $745 million, primarily driven by an increase in Youku’s advertising revenue.
Looking ahead, Wu emphasized that Alibaba will continue to focus on its strategic priorities in e-commerce and cloud computing, including further investments to drive long-term growth.
