Alibaba's core net profit plunged 84% year-over-year in the March quarter, a sharp decline offset only partially by accelerating AI and cloud revenue growth. The earnings miss reflects margin compression in core e-commerce and advertising segments, even as the company scales Qwen LLM and Alibaba Cloud AI services.
The earnings divergence—strong AI growth amid collapsing profit—highlights structural headwinds in Chinese tech majors: overcapacity in e-commerce, domestic weakness, and the capex intensity of AI infrastructure competing with legacy business cash flow.