Trump’s China Visit Boosts China Stocks Nearly 4%, Alibaba Favored by AI Bets Despite Weak Results

Alibaba reported its fourth-quarter fiscal 2026 results after the bell on May 13. Dragged down by massive investments in AI infrastructure, the company swung to an operating loss of 848 million yuan (RMB, same hereafter) for the quarter, compared with a profit of 28.465 billion yuan in the same period last year; free cash flow was a net outflow of 17.3 billion yuan, compared with a net inflow of 3.743 billion yuan a year ago.

[Source: Tradingkey]

However, while overall losses widened, the progress in AI commercialization for Alibaba Cloud emerged as the standout highlight. Cloud Intelligence Group revenue reached 41.626 billion yuan, up 38% year-on-year, while Alibaba Cloud's external commercial revenue grew 40% year-on-year, with AI-related product revenue hitting 8.971 billion yuan, accounting for over 30% of external cloud commercial revenue for the first time.

Furthermore, annualized recurring revenue from AI-based services has exceeded 35.8 billion yuan, and AI-related product revenue has achieved triple-digit year-on-year growth for the 11th consecutive quarter.

[Source: Alibaba Official Financial Report]

Alibaba's AI infrastructure is accelerating its rollout. As of February 2026, its semiconductor subsidiary T-Head has delivered a cumulative 470,000 self-developed GPUs, with over 60% serving external clients; the "Zhenwu PPU" AI chip has seen over 100,000 units deployed, with more than 30 automakers developing technologies based on it.

At the model level, monthly active users (MAU) for the Qwen series' consumer-facing applications have surpassed 300 million, with nearly 140 million users experiencing AI shopping through agents. AI services, including the Bailian MaaS platform, are expected to see annualized recurring revenue (ARR) exceed RMB 30 billion by year-end.

Management expressed optimism regarding AI prospects. CEO Eddie Wu noted that all computing cards currently in servers are fully utilized, and AI-related product revenue is expected to account for more than 50% of Alibaba Cloud's total revenue over the next year.

CFO Toby Xu stated that net cash, excluding long-term debt, stands at approximately $59 billion, which is sufficient to support a significant increase in capital expenditure (CapEx), far exceeding the previous three-year commitment of RMB 380 billion.

Tencent, which released its quarterly report on the same day, signaled similar trends. The company stated that demand for AI-related services continues to grow, and CapEx this year will exceed last year's. Following the delivery of domestic ASIC chips in the second half of the year, AI investment will be further ramped up.

Notably, full computing capacity utilization does not equate to profitability. Alibaba currently faces operating losses and negative free cash flow, and high CapEx will rapidly deplete the $59 billion cash reserve. Management's optimism requires validation from upcoming quarterly results; otherwise, high investment represents high risk rather than guaranteed growth.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.