Alibaba (BABA) share slipped Thursday after it reported a top and bottom line miss in the fourth quarter. Shares fell 5% in US pre-mkt trade, but the stock remains +50% or so YTD as investors continue to see positives from the AI story and China consumer trends, while tariff risks are receding.

Key stats

• Revenues rose 7% to 236.5 billion Chinese yuan ($32.6bn), versus 237.2 billion yuan expected.

• Net income 12.38 billion yuan, compared with 24.7 billion expected.

Numbers dive

Core China consumer looks OK and efforts to boost consumption by the authorities paying off? Taobao and Tmall revenues +8%, with its customer management business, which Alibaba earns from selling marketing and other services to merchants on its platform, was strong at +12%. Direct sales –1% on inventory shift. Wholesales revs +17%. Taobao and Tmall Group total was +9%, ahead of the pace of growth in the prior quarter. Full year earnings (EBITA) at this segment +1% with revs +3%.

In terms of the core China story – the revenue growth is solid given the intense competition from the likes of PDD and JD.com. But pricing/margin is the issue as a result – here generally there is improvement across most metrics. Alibaba recently extended its partnership with RedNote, which enables sellers to embed product links from Alibaba's Taobao and Tmall stores into content posts on RedNote in China, known locally as Xiaohongshu.

Cloud Intelligence revenue growth continues to accelerate: revs +18% vs +16% expected, with AI-related product revenue achieving triple-digit growth for the seventh consecutive quarter. Cloud growth seems to be accelerating from  +11% across the year as a whole. BABA said growth was driven by “faster public cloud revenue growth” and by “increasing adoption of AI-related products.” Management also noted improving operating efficiency, partly offset by the increasing investments in customer growth and technology innovation. Its AI chatbot Qwen is red hot but competition is likewise – Tencent upping capex by 91% this year.

BABA has seen strong tailwinds from a relatively new interest in the China AI story off the back of the DeepSeek shock earlier this year. The launch of DeepSeek’s cheaper chatbot has raised expectations that AI adoption will accelerate and boost Alibaba Cloud’s services. Alibaba recently released its latest large language model, Qwen3 and has made significant progress in expanding its AI and cloud businesses in recent quarters,

There may be signs of Alibaba being able to monetize this technology with greater efficiency. Earnings before interest, tax and amortisation (EBITA) from Cloud +69%, up from +33% in the prior quarter.

International sales +22%, with wholesale +16% and retail +24%.

Logistics was one sour note with revenues from the Cainiao Smart Logistics Network –12% as it struggled to integrate this with its e-commerce business.

What's the Consensus on BABA?