Alibaba (BABA) reported its earnings for the fourth quarter and full fiscal year 2025, showing steady revenue growth and major progress in its artificial intelligence and cloud businesses. However, despite the strong headline numbers, the company missed Wall Street’s earnings expectations, leading to a mixed reaction from investors. As of writing, stock performance in pre-market trading is painted in red.
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Fourth Quarter Highlights
For the quarter, Alibaba generated revenue of 236.5 billion Chinese yuan, which is about $32.6 billion. This marked a 7% increase compared to the same period last year. Income from operations nearly doubled, rising 93% to 28.5 billion yuan, helped by better operating efficiency and lower share-based compensation costs.
Alibaba’s cloud division was a standout, with revenue growing 18%. The company noted that its artificial intelligence-related product sales have now posted triple-digit growth for seven straight quarters. Its new open-source AI model series, Qwen3, is gaining traction, and Gartner recently named the cloud business an emerging leader in all four major generative AI categories.
In its core e-commerce business, revenue from customer management on Taobao and Tmall climbed 12%, showing that recent user experience and monetization investments are paying off. However, losses continued in other areas such as the international digital commerce segment and logistics business, Cainiao, although those losses narrowed.
Earnings Per Share Falls Short
Alibaba’s non-GAAP net income for the quarter was 29.8 billion yuan, or approximately $4.1 billion, below what many analysts had expected. Earnings per American depositary share were $1.73, also falling short of estimates.
One area that raised eyebrows was Alibaba’s free cash flow, which dropped sharply by 76% compared to the same quarter last year. This was mostly due to heavy spending on cloud infrastructure.
On the shareholder front, Alibaba returned capital aggressively, repurchasing nearly $12 billion worth of stock over the year and declaring a dividend payout of $4.6 billion.
Overall, Alibaba’s report showed solid strategic progress, especially in AI and cloud. However, rising costs and weaker-than-expected earnings suggest it is still navigating a complex path to sustained profitability.
Is Alibaba Stock a Buy?
Turning to the Street’s analysts, Alibaba boasts a Strong Buy rating, with an average BABA stock price target at $167.13. This implies a 24.68% upside.
