Alibaba’s cloud and artificial intelligence revenue accelerated sharply in the first quarter of 2026, the Chinese e-commerce and technology group said on Wednesday, as heavy investment in AI infrastructure pushed its operating result to a loss. Revenue from the Cloud Intelligence Group, which bundles cloud computing and AI services, rose 38% from a year earlier to 41.6 billion yuan ($6.1 billion), faster than the 36% growth recorded in the previous quarter. Total company revenue edged up 3% to 243 billion yuan ($36 billion), but Alibaba swung to an operating loss of 848 million yuan ($125 million) from a 28.5 billion yuan profit a year earlier.
The Hangzhou-based company has pledged to invest at least 380 billion yuan over three years in cloud and AI infrastructure, mirroring a global surge in capital spending as technology firms race to build out capacity for ballooning demand. “Alibaba’s AI has moved beyond the initial investment phase and progressed commercialization at scale,” Chief Executive Eddie Wu said in prepared remarks during an earnings call. The company this week said it had fully integrated its flagship Qwen AI app into its Taobao e-commerce platform, enabling customers to browse, compare, place orders and track deliveries through natural conversation. It also launched an “agentic” AI tool, Wukong, for business customers in March and raised prices for some AI services.
Alibaba’s U.S.-listed shares rose more than 7% after the results. Jacob Cooke, chief executive of Beijing-based consultancy WPIC Marketing + Technologies, said “we should expect AI-related growth to accelerate further.” The company in March set a target of exceeding $100 billion in annual AI and cloud revenue within five years.
Rival Tencent also reported results on Wednesday, posting a weaker-than-expected revenue figure for the quarter, though net profit rose 21% and some analysts see early returns from its AI investments. In a recent research note, Morningstar analyst Chelsey Tam wrote that capital expenditure across Chinese AI companies was likely to remain elevated because “the investment phase is far from over,” while companies would increasingly pivot from acquiring users to monetizing AI services.