Alibaba Cloud Posts 45% Growth in External Revenue for Quarter Ended in June
Key Facts
Alibaba reported results on August 20 for the quarter ended June 30, 2026, saying revenue from cloud computing and AI services accelerated to 45% year-on-year growth. Revenue from “AI Cloud and Computing Services” was 48,437 million yuan, or 7,139 million dollars, in the quarter. The company said year-on-year growth in total segment revenue and revenue from external customers accelerated to 45%. It described cloud revenue growth as the strongest in 22 quarters. The performance put its cloud business in focus in a quarter when overall revenue grew at a much slower pace.
Alibaba attributed cloud momentum mainly to rising adoption of AI-related products. Revenue from AI-related products reached 1.8 billion dollars during the quarter, recording triple-digit year-on-year growth for the 12th consecutive quarter. The company said the integration of its T-Head chip design unit with its foundational models improved the commercialization efficiency of AI applications and generated synergies across its technology ecosystem. It added that its Zhenwu M890 AI processor had reached more than 650 external customers across more than 20 industries through Alibaba Cloud services. The indicators reflect expanding demand for related products and computing infrastructure, according to the company’s results.
The quarterly acceleration followed 40% growth in external cloud revenue in the quarter ended March 31, before the rate rose to 45% in the quarter ended in June. At group level, revenue was 268,953 million yuan, or 39,639 million dollars, up 9% year on year. Net income, however, fell 75% to 10,444 million yuan, or 1,539 million dollars. The company attributed the decline mainly to lower income from operations, reduced gains from the sale of investments and lower gains from revaluation of equity investments. The results thus highlighted the divergence between cloud business expansion and a decline in group net income over the same period.
Cloud growth was accompanied by a sharp increase in infrastructure spending. Capital expenditure was 67,678 million yuan, or 9,975 million dollars, up 75% from the same quarter in 2025, when it was 38,676 million yuan. Alibaba said the increase was related to fluctuations in equipment purchasing cycles, the addition of central processing unit computing capacity in preparation for adoption of AI agents, and higher prices for chip components. The Associated Press reported that spending included investments in AI infrastructure to meet customer demand. Free cash flow, meanwhile, recorded an outflow of 44,670 million yuan, or 6,584 million dollars, compared with an outflow of 18,815 million yuan in the same period a year earlier. The company attributed the decline in free cash flow mainly to increased spending on cloud infrastructure.
As investment rose, adjusted earnings before interest, taxes, depreciation and amortization in the cloud segment improved, according to Alibaba’s data. The figure increased 133% to 830 million dollars, with a margin of about 12% in the quarter ended in June. After the results were announced on August 20, the company’s U.S.-traded shares fell more than 3% that day, according to the Associated Press. In the latest market reading cited here, “BABA” closed at 100.96 dollars on October 28, 2026. The available closing data did not include intraday trading levels, so the figure is limited to the closing price.
Management ties the next phase of growth to expanding capacity to meet demand. Chief Executive Eddie Wu said AI and cloud revenue growth “will accelerate further in the coming quarters as we continue to increase supply,” adding that the company expects profitability to continue improving. Alibaba previously announced plans to invest at least 380 billion yuan over three years in cloud computing and AI infrastructure. It also pledged to exceed 100 billion dollars in annual revenue from AI and cloud within five years. Delivering on these plans and expanding supply are central to assessing the company’s ability to sustain business growth while funding its capital needs.