Alibaba Q1 Earnings: Net Income Up 78%, E-commerce Revenue Rises 9%

Alibaba Group reported a 78% YoY increase in net income to RMB 43.1 billion in Q1, driven by mark-to-market changes from equity investments and a gain from the disposal of Trendyol's local consumer service business. Adjusted EBITA decreased 14% to RMB 38.84 billion, and non-GAAP net income fell 18% to RMB 33.5 billion. Revenue increased 2% to RMB 247.65 billion, with e-commerce revenue up 9% to RMB 118.6 billion.

Alibaba Group reported a 78% year-over-year (YoY) increase in net income to RMB 43.1 billion in Q1 2025, driven by mark-to-market changes from equity investments and a gain from the disposal of Trendyol's local consumer service business. Adjusted EBITA decreased 14% to RMB 38.84 billion, and non-GAAP net income fell 18% to RMB 33.5 billion. Revenue increased 2% to RMB 247.65 billion, with e-commerce revenue up 9% to RMB 118.6 billion.

The company's strategic focus on AI and cloud has delivered robust growth, with Alibaba Cloud revenue accelerating 26% YoY to RMB 33.4 billion, marking its fastest growth in over three years. AI-related product revenue achieved triple-digit growth for the eighth consecutive quarter, underscoring Alibaba's position as a full-stack AI + Cloud company [1].

Alibaba's Cloud Intelligence Group experienced 18% year-over-year growth to $4.15 billion, driven by triple-digit expansion in AI products like Lingma and Qwen3. This growth was supported by increasing adoption of AI products by customers and the rapid development of AI applications [2].

The company's comprehensive consumption platform, formed by combining Taobao, Tmall Group, Ele.me, and Fliggy, has unleashed synergies. The Taobao Instant Commerce service contributed to a 25% year-over-year increase in monthly active consumers on the Taobao app in the first three weeks of August. The new cross-platform loyalty program also achieved higher retention via increased user engagement [1].

Alibaba's International Digital Commerce Group (AIDC) delivered a robust 19% year-over-year revenue growth, led by strong performance from AliExpress and Trendyol. The company executed well against its commitment to improve operating efficiency, significantly narrowing its loss to approach breakeven this quarter [1].

Despite these positive developments, Alibaba faces challenges. Rising competition in enterprise cloud services and consumer resistance to paid AI tools in China have pressured monetization. Valuation metrics suggest a compelling case for undervaluation, with a forward P/E of 13.65 and EV/EBITDA of 9.27 trailing peers like Tencent and AWS [2].

Alibaba's strategic bet on AI and cloud is both a strength and a risk. The company's undervalued metrics and leadership in China's AI cloud market suggest potential for reinvigoration, particularly if it can scale monetization of generative AI tools. However, the margin pressures in e-commerce and local services, coupled with global cloud competition, necessitate caution. For investors, Alibaba represents a high-conviction opportunity if its AI investments translate into sustainable profitability, but the current valuation may already reflect optimism about such outcomes [2].

References:
[1] https://www.alizila.com/alibaba-q1-results-deliver-strong-growth-in-ai-and-quick-commerce/
[2] https://www.ainvest.com/news/alibaba-q1-earnings-pivotal-test-ai-driven-growth-economic-headwinds-2508/