Business Insider·2025-09-01 05:22Core Insights - Alibaba's latest earnings report indicates a shift in investor focus towards artificial intelligence (AI) as a key growth driver despite challenges in its food delivery business [1][2][4] Financial Performance - Alibaba reported a 2% increase in overall revenue to 247.65 billion yuan ($34.6 billion) for the quarter ending June 30, falling short of analysts' expectations of 252.92 billion yuan [1] - Operating profit decreased by 3% to 35 billion yuan [1] - The company's e-commerce segment, including food delivery, achieved a 10% revenue growth year-over-year, totaling 140 billion yuan [8] AI and Cloud Growth - AI-related product revenue saw a triple-digit percentage increase, while Alibaba Cloud's revenue surged by 26% year-over-year to 33.4 billion yuan, surpassing analyst expectations of an 18% rise [2][3] - CEO Eddie Wu highlighted that investments in AI are beginning to yield tangible results, indicating a clear path for AI to drive future growth [3] Food Delivery Challenges - The food delivery sector has been a significant drag on profits, with earnings before interest, taxes, and amortization falling by 21% due to heavy subsidies [8] - Alibaba has been investing heavily in its quick commerce business to compete with rivals like Meituan and JD.com, leading to substantial losses [9] - Analysts suggest that Alibaba's quick commerce sector has reached a scale that allows for a shift from aggressive market capture to optimizing efficiency [10] Market Position and Stock Performance - Alibaba's stock closed 12.9% higher in New York and gained as much as 18% in Hong Kong following the earnings report, reflecting investor optimism about AI growth [2] - The company's stock has increased by 59% in New York and 65% in Hong Kong year-to-date [12]