Tanking Profit Overshadowed Alibaba’s AI Growth And Reignited Domestic E-Commerce
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On Tuesday, Alibaba Group Holding Limited (NYSE: BABA) reported its net profit took quite a dive during the fiscal fourth quarter, after already having a hard time throughout 2023 as it underwent its largest-ever corporate restructuring.
Fourth Fiscal Quarter Highlights
For the quarter ended on March 31st, Alibaba posted revenue grew 7% YoY to 221.9 billion yuan, which amounts $30.7 billion, as it boosted domestic e-commerce sales. But, Alibaba reported its net income attributable to ordinary shareholders tanked as much as 86% YoY to 3.27 billion yuan, which is about $452 million, attributing the poor result to a net loss from investments in publicly-traded companies, compared to last year’s quarter when it made a net gain.
Early signs of reignited e-commerce growth.
Although Alibaba is still grappling with cautious consumers in China amid the economic slowdown, its core e-commerce business has improved due to its focus on low-cost goods. Taobao and Tmall division that represent its e-commerce segment reported 4% YoY growth to 93.2 billion yuan, accelerating from previous quarter’s 2% growth.
Customer management revenue which consists of sales received from services such as marketing that merchants get from Alibaba, reported 5% YoY growth, also improving from being flat in the previous quarter. International commerce business grew 45% YoY 27.4 billion yuan.
Cloud growth fails to impress, but AI rose to the task.
The cloud computing division is having a hard time to shine. Last year, Alibaba decided not proceed with the spinoff of the division that competes with Microsoft Corporation (NASDAQ: MSFT) Azure, Amazon.com Inc (NASDAQ: AMZN) AWS and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)-owned Google Cloud. For the reported quarter, Cloud computing brought in 25.6 billion yuan to the revenue table, posting the same growth rate of 3% YoY from the previous quarter.
However, AI-related revenue reported a triple-digit YoY growth. AI-revenue came from various sectors, including foundational model companies, internet companies, financial services and the automotive industry.
A Big Week For Global AI Development
On Monday, Microsoft-backed OpenAI launched its new AI model, GPT-4o. Through a livestreamed event, Microsoft-backed OpenAI demonstrated its latest effort of expanding the use of its chatbot and improving its capabilities as it made a significant step when it comes to ease of use. Microsoft-backed Open AI demonstrated the capabilities of the new model that is able to even perceive the user’s emotion, help calm a user down before making a public speech as well as read a story in a different tone or even sing it. OpenAI also touted the fact the new model can act as a translator even in audio mode. Moreover, by solving math equations and helping to write codes, GPT-4o is a strong contender to Microsoft-made GitHub Copilot.
All in all, Alibaba did report its profit plummeted, but its core business as well as the promising AI segment are growing, both of which are the main heroes of its storyline and future prospects.
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This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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