--- title: Alibaba's profit sinks 75% as it doubles down on AI,... description: Alibaba's net profit dropped 75% to $1.54 billion in the June quarter despite cloud revenue growing 45%, its fastest pace in 22 quarters. The gap is driven by... canonical: https://daily.dev/posts/alibaba-s-profit-sinks-75-as-it-doubles-down-on-ai-then-raises-10-2b-more-to-spend-wwaki3lct twitter:card: summary_large_image twitter:site: @dailydotdev og:type: website og:site_name: daily.dev og:title: Alibaba's profit sinks 75% as it doubles down on AI, then raises $10.2B more to spend | daily.dev og:description: Alibaba's net profit dropped 75% to $1.54 billion in the June quarter despite cloud revenue growing 45%, its fastest pace in 22 quarters. The gap is driven by... og:url: https://daily.dev/posts/alibaba-s-profit-sinks-75-as-it-doubles-down-on-ai-then-raises-10-2b-more-to-spend-wwaki3lct og:image: https://api.daily.dev/og/posts/wWAKI3Lct.png og:image:alt: Alibaba's profit sinks 75% as it doubles down on AI, then raises $10.2B more to spend og:image:width: 1200 og:image:height: 630 og:locale: en --- > ## Documentation Index > Fetch the complete documentation index at: https://daily.dev/llms.txt > Use this file to discover all available pages before exploring further. # Alibaba's profit sinks 75% as it doubles down on AI, then raises $10.2B more to spend **[Collections](https://daily.dev/sources/collections)** · 1 min read · 3 upvotes · 0 comments ## Summary Alibaba's net profit dropped 75% to $1.54 billion in the June quarter despite cloud revenue growing 45%, its fastest pace in 22 quarters. The gap is driven by AI capital expenditure of $9.98 billion, up 75% year over year, plus a $2.04 billion loss in the new AI Labs and Applications unit housing Qwen, a €550 million EU fine, and a $657 million goodwill impairment. Days later, Alibaba announced a HK$80 billion (~$10.2 billion) Hong Kong share placement, with all proceeds earmarked for AI infrastructure, marking a reversal from the $11.9 billion in buybacks it did in fiscal 2025. The company owns Qwen, cloud infrastructure, and proprietary AI chips, and targets $100 billion in combined cloud and AI revenue within five years, even as core e-commerce revenue shrinks and EU sovereignty rules threaten its European cloud expansion. ## Content Alibaba just spent a week doing three things that only make sense together: raising $10.2 billion, watching quarterly profit fall off a cliff, and shipping a new video generation model. Here's how the pieces fit. ## The raise Alibaba is selling HK$80bn (about $10.2 billion) in new shares on the Hong Kong exchange, and it says every dollar of net proceeds goes to AI — infrastructure buildout and "full-stack" AI capabilities. It's the largest primary follow-on offering ever by a Hong Kong-listed company, and the largest Regulation S equity offering on record. Globally this year, only Alphabet's $85bn raise and Intel's offering were bigger. What makes this notable isn't just the size. Alibaba spent $11.9 billion buying back its own stock in fiscal 2025, cutting shares outstanding by 5.1%. Now, roughly a year later, it's issuing new shares and accepting dilution to fund the next round of AI spending. Those two moves don't contradict each other exactly, but they do show how fast the company's capital priorities have shifted. Buying back stock says ## Questions this post answers ### Why did Alibaba's profit drop 75% even though cloud revenue grew? Alibaba's net profit fell 75% to $1.54 billion in the June quarter because AI capital expenditure hit $9.98 billion, up 75% year over year, while the new AI Labs and Applications unit housing Qwen lost $2.04 billion. A €550 million EU fine against AliExpress and a $657 million goodwill impairment added further pressure, even as cloud revenue grew 45%, its fastest pace in 22 quarters. _Track how AI infrastructure spending reshapes tech earnings by following cloud and AI capex trends on daily.dev._ ### How much money is Alibaba raising for AI and what is it for? Alibaba is raising HK$80 billion, about $10.2 billion, through a Hong Kong share placement, with every dollar of net proceeds earmarked for AI infrastructure expansion and full-stack AI capabilities. If completed, it will be the largest primary follow-on offering ever by a Hong Kong-listed company and the largest Regulation S equity offering on record. _Developers evaluating cloud providers can watch how this AI capital raise shapes Alibaba Cloud's roadmap on daily.dev._ ### What is Alibaba's revenue target for its cloud and AI business? Alibaba wants to reach $100 billion in combined cloud and AI revenue within five years. Cloud and AI revenue already reached 48.44 billion yuan for the quarter, and AI model services alone are generating over 16 billion yuan in annual recurring revenue, supported by its Qwen models, cloud infrastructure, and proprietary AI chips. _Anyone comparing cloud and AI platforms can follow Alibaba Cloud's growth trajectory on daily.dev._ ## Similar posts on daily.dev - [Alibaba sells its Lingxi games arm to fund an all-in bet on AI](https://daily.dev/posts/alibaba-sells-its-lingxi-games-arm-to-fund-an-all-in-bet-on-ai-hpxbd0mbc) · The Next Web · 0 upvotes · 0 comments --- Tags: [#cloud](https://daily.dev/tags/cloud), [#ai-infrastructure](https://daily.dev/tags/ai-infrastructure), [#alibaba](https://daily.dev/tags/alibaba), [#qwen](https://daily.dev/tags/qwen) [View this post on daily.dev](https://daily.dev/posts/alibaba-s-profit-sinks-75-as-it-doubles-down-on-ai-then-raises-10-2b-more-to-spend-wwaki3lct) ```json {"@context":"https://schema.org","@graph":[{"@type":"Organization","@id":"https://daily.dev/#organization","name":"daily.dev","url":"https://daily.dev","logo":{"@type":"ImageObject","url":"https://daily.dev/apple-touch-icon.png","width":180,"height":180},"sameAs":["https://twitter.com/dailydotdev","https://github.com/dailydotdev","https://www.linkedin.com/company/daily-dev-ltd"]},{"@type":"WebSite","@id":"https://daily.dev/#website","url":"https://daily.dev","name":"daily.dev","publisher":{"@id":"https://daily.dev/#organization"},"potentialAction":{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https://daily.dev/search?q={search_term_string}"},"query-input":"required name=search_term_string"}}]} {"@context":"https://schema.org","@type":"TechArticle","headline":"Alibaba's profit sinks 75% as it doubles down on AI, then raises $10.2B more to spend","url":"https://daily.dev/posts/alibaba-s-profit-sinks-75-as-it-doubles-down-on-ai-then-raises-10-2b-more-to-spend-wwaki3lct","mainEntityOfPage":{"@type":"WebPage","@id":"https://daily.dev/posts/alibaba-s-profit-sinks-75-as-it-doubles-down-on-ai-then-raises-10-2b-more-to-spend-wwaki3lct"},"datePublished":"2026-08-23T14:17:35.550Z","dateModified":"2026-08-24T09:15:18.741Z","description":"Alibaba's net profit dropped 75% to $1.54 billion in the June quarter despite cloud revenue growing 45%, its fastest pace in 22 quarters. 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A €550 million EU fine against AliExpress and a $657 million goodwill impairment added further pressure, even as cloud revenue grew 45%, its fastest pace in 22 quarters. Track how AI infrastructure spending reshapes tech earnings by following cloud and AI capex trends on daily.dev."}},{"@type":"Question","name":"How much money is Alibaba raising for AI and what is it for?","acceptedAnswer":{"@type":"Answer","text":"Alibaba is raising HK$80 billion, about $10.2 billion, through a Hong Kong share placement, with every dollar of net proceeds earmarked for AI infrastructure expansion and full-stack AI capabilities. If completed, it will be the largest primary follow-on offering ever by a Hong Kong-listed company and the largest Regulation S equity offering on record. Developers evaluating cloud providers can watch how this AI capital raise shapes Alibaba Cloud's roadmap on daily.dev."}},{"@type":"Question","name":"What is Alibaba's revenue target for its cloud and AI business?","acceptedAnswer":{"@type":"Answer","text":"Alibaba wants to reach $100 billion in combined cloud and AI revenue within five years. Cloud and AI revenue already reached 48.44 billion yuan for the quarter, and AI model services alone are generating over 16 billion yuan in annual recurring revenue, supported by its Qwen models, cloud infrastructure, and proprietary AI chips. Anyone comparing cloud and AI platforms can follow Alibaba Cloud's growth trajectory on daily.dev."}}]} ```