Can Q2 Earnings Finally Make Alibaba Great Again?

On November 25, before the U.S. market opens, Alibaba will release its fiscal Q2 2026 earnings (the natural third quarter of 2025). As the most authentic AI leader among Chinese ADRs, can this earnings report "Make Alibaba Great Again"?

The market expects Alibaba to report Q3 revenue of RMB 243.2 billion, up 2.83% year over year; EPS is expected at RMB 5.49, with a notable decline from last year due to the food-delivery subsidy war pressuring profits.

Alibaba Cloud & AI: The Core Growth Engine

On Monday, Alibaba announced that its "Qwen" app surpassed 10 million downloads within the first week of public testing. This growth rate has already exceeded ChatGPT, Sora, and DeepSeek, making it the fastest-growing AI application.

According to research by Sullivan, in the first half of 2025, Alibaba's Tongyi Qianwen model captured 17.7% of China's daily model API calls—ranking first, ahead of ByteDance's Doubao (14.1%) and DeepSeek (10.3%).

With Qwen as a major traffic gateway, Alibaba may establish a complete consumer-side monetization loop through paid subscriptions, advertising, and other models—an important factor supporting valuation.

In the first half of 2025, Alibaba Cloud held a 40% share of China's AI cloud market, far ahead of competitors.

Research firm Omdia forecasts China's intelligent-cloud market to reach RMB 51.8 billion in 2025—more than double 2024's RMB 20.8 billion. By 2030, the market is expected to expand to RMB 193 billion, a CAGR of 26.8%, with Alibaba Cloud being the biggest beneficiary.

Beyond China, Alibaba Cloud is accelerating outbound expansion, establishing its first cloud regions in Brazil, France, and the Netherlands, directly challenging global cloud leaders AWS, Microsoft Azure, and Google Cloud. Overseas cloud markets offer higher growth and margins.

For example, AstraZeneca, using Alibaba Cloud's European nodes, improved new-drug discovery efficiency by over 3x—a powerful proof of Alibaba Cloud's competitiveness for global enterprises.

China E-commerce: Core Business Stable

Alibaba's e-commerce rivals JD and Pinduoduo have already beaten expectations in their latest results, suggesting Alibaba's performance should also be solid. Taotian Group's GMV is expected to grow 7%, continuing the steady trend from last quarter.

Alibaba is integrating Ele.me into Taobao Flash Sales, creating a synergy where Taobao captures front-end traffic and Flash Sales provides back-end fulfillment. This model is improving user engagement and retention on the main platform.

J.P. Morgan estimates that China's fast-moving consumer goods (FMCG) market will reach RMB 4 trillion by 2030, accounting for a quarter of total retail. Alibaba holds advantages in FMCG assortment, pricing, and fulfillment speed.

Alibaba's platform has 1 billion users, and the growing base of 88VIP members is enhancing user stickiness. Its Cainiao logistics infrastructure supports rapid fulfillment requirements.

Alibaba also possesses a strong balance sheet and cash flow, providing solid support for the food-delivery subsidy war. The supply of Flash Sales merchants has reached 80% of Meituan's level, up significantly from 50% three years ago.

In the 2025 "China food-delivery war," Alibaba is investing RMB 50 billion—below Meituan's RMB 100 billion, but well above JD's RMB 10 billion. Given Alibaba's financial strength, Taobao Flash Sales is expected to compete head-to-head with Meituan.

Alibaba International Digital Commerce (AIDC): Turning Profitable This Year, Watch for AI Advancements

AIDC focuses on cross-border e-commerce, covering AliExpress, Trendyol, and others. Revenue for the segment is expected at RMB 36.96 billion, up 16.7%, with adjusted EBITA near breakeven. Under cost-optimization efforts, AIDC is expected to achieve quarterly profitability within the year.

Importantly, at the September Alibaba Cloud Summit, the company launched the cross-border e-commerce AI agent "Aoxia." It can shorten product-selection cycles from several days to just minutes. With this tool, cross-border merchants may see improved operational efficiency, driving continued growth in both scale and profitability.