Alibaba's "dual ballast" quickly releases its power

Author | Chai Xuchen

Editor | Zhou Zhiyu

AI + Cloud and consumption, the two strategic areas, have increasingly become Alibaba's strong ballast.

On August 29, Alibaba Group released its financial report for the first quarter of fiscal year 2026. Excluding the impact of sold businesses, the group's overall revenue grew by 10% year-on-year; net profit increased by 76%, exceeding market expectations.

The stabilization of Alibaba's core business is crucially linked to its continued investment in the two strategic areas of AI + Cloud and consumption.

It is reported that Alibaba Cloud's revenue grew by 26% year-on-year, surpassing the previous quarter's 18% growth rate, reaching a three-year high. Revenue from AI-related products has achieved triple-digit year-on-year growth for eight consecutive quarters; the instant retail business has rapidly achieved phased results, with the monthly active consumers of the Taobao app increasing by 25% year-on-year in the first three weeks of August. The monthly active consumers and daily order volume of Chinese e-commerce groups continue to hit new highs.

At the end of February, Alibaba announced an investment of 380 billion yuan over the next three years to build cloud and AI hardware infrastructure, and launched its instant retail business at the end of April. In July, it announced an investment of 50 billion yuan in the consumption sector to seize the historic growth opportunities in the two strategic areas of AI and consumption, achieving phased results this quarter.

"In this quarter, we focused on consumption and the AI + Cloud strategy, achieving strong growth," said Alibaba Group CEO Eddie Wu. "Alibaba's significant investment in the instant retail business has won consumer mindshare. By integrating consumption platforms, we have generated significant synergies, driving monthly active consumers and daily order volume to new highs. Driven by sustained strong demand for AI, the revenue of the Cloud Intelligence Group has accelerated growth, with AI revenue significantly contributing to external commercialization revenue in the cloud."

After tasting success, Alibaba announced that it would continue to firmly invest around the two strategic focuses of large consumption and AI + Cloud. Among these, AI plus Cloud is the strategic key stronghold.

Currently, Alibaba has established a full-stack technical capability from AI computing power, AI cloud platforms, AI models and applications to open-source ecosystems, supporting the strong demand for AI across various industries and driving long-term growth.

In this quarter, Alibaba's capital expenditure on AI + Cloud reached 38.6 billion yuan, a year-on-year increase of 220%. Alibaba is firmly investing in cloud and AI infrastructure construction, with AI becoming one of the core driving forces for cloud business growth.

During the period, while AI demand grew rapidly, AI applications also drove the growth of traditional computing and storage products, leading to a 26% year-on-year increase in Alibaba Cloud's revenue, achieving the highest growth rate in three years, with AI-related product revenue achieving triple-digit year-on-year growth for eight consecutive quarters.

Beyond the hardware moat, Alibaba is also continuing to strengthen its ecosystem, firmly investing in AI model innovation.

Recently, the Tongyi AI large model achieved "N consecutive releases," continuously open-sourcing new versions of the Qianwen 3 non-thinking base model, reasoning model, and AI programming model, winning global open-source championships in mainstream fields such as base models, programming models, and reasoning models.

On the other hand, Alibaba's AI-native applications are also continuing to accelerate development.

Amap has fully integrated AI, launching the world's first AI-native application based on maps—Amap 2025; DingTalk has recently completed an AI upgrade, creating the world's first Agent-driven work information flow; the Taobao platform has also achieved a series of AI application upgrades, including AI search and AI advertising platform While AI narrative quickly achieves results, Alibaba is also focusing on building a large consumption platform.

In this quarter, Taotian Group, Ele.me, and Fliggy completed strategic integration to form Alibaba China E-commerce Group, co-creating a large consumption platform to meet users' demands for a full-scenario consumption experience, expanding the industry cake, and exploring new business forms.

Instant retail has quickly achieved phased results, winning consumer mindshare, with the first three weeks of August driving a 25% year-on-year increase in monthly active consumers on the Taobao app.

Platform integration has brought positive business synergy effects. In this quarter, the monthly active consumers and daily order volume of the China E-commerce Group continued to reach new highs. In terms of member integration, Taobao launched a large member system, connecting the membership benefits of Ele.me, Fliggy, and Amap, covering various life scenarios such as clothing, food, housing, and transportation. The number of 88VIP members continues to maintain double-digit year-on-year growth, and customer management revenue increased by 10% year-on-year.

While firmly investing in two strategic areas and driving core business growth, Alibaba's operational efficiency across multiple businesses continues to improve. In this quarter, Alibaba International Digital Commerce Group's revenue grew by 19% year-on-year, approaching breakeven; the operational performance of businesses such as Hema, Amap, Whale Entertainment, and Alibaba Health has also continued to improve