Chinese e-commerce giant Alibaba (BABA) just reported its Q1 FY26 earnings results for the quarter ended June 30, 2025, showing a mixed performance. While revenue fell short of Wall Street estimates, stronger-than-expected profit and momentum in cloud and AI helped lift the stock roughly 4% in pre-market trading.
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First Quarter Highlights
For the quarter, Alibaba posted revenue of 247.7 billion yuan ($34.6 billion), up 2% year-over-year but below analysts’ expectations of 252.9 billion yuan. Net income came in at $5.9 billion, well ahead of consensus estimates of $3.7 billion, thanks to cost efficiencies and improving margins across non-core units. Meanwhile, adjusted earnings per ADS rose to $2.06, beating the consensus estimate of about $1.98.
Alibaba’s Cloud Intelligence Group was the star performer, with revenue jumping 26% year-over-year to 33.4 billion yuan. Growth was fueled by rising enterprise demand for AI services and continued momentum in China’s internet sector.
Meanwhile, Alibaba’s China e-commerce unit, which houses Taobao and Tmall, posted a 10% year-over-year revenue increase. Customer management revenue also climbed 10%, reflecting stronger monetization on the platforms.
Alibaba Rolls Out New AI Chip to Boost Cloud Edge
Alongside the earnings release, Alibaba highlighted progress in its AI initiatives. The company introduced a new cloud-computing chip designed to handle a wider range of AI inference tasks, marking a step beyond its earlier, more specialized processors, according to the Wall Street Journal.
The report added that the in-house chip could reduce Alibaba’s reliance on restricted U.S. hardware and strengthen its long-term position in cloud and AI.
Share Repurchases
Alibaba repurchased 56 million ordinary shares (equivalent to 7 million ADSs) during the quarter ended June 30, 2025, for a total of $815 million.
Outlook
Alibaba did not issue revenue guidance for the year but said cloud and AI will remain key priorities, with plans to grow its presence in AI-driven cloud services.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain bullish about Alibaba’s stock trajectory. With 12 Buy ratings and one Hold rating, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $148.55 implies about 24.24% upside potential from current levels. However, it’s worth noting that estimates will likely change following today’s earnings report.
