Alibaba’s Profit Skyrockets 63%, But One Major Metric Missed the Mark

2024-11-16T06:22:55Z

Alibaba just dropped its Q3 results, and here’s the headline: net income skyrocketed 63% to RMB43.5 billion ($6 billion). What’s driving this rocket? Its cloud business and a massive bet on AI. CEO Eddie Wu nailed it, pointing out double-digit growth in public cloud revenues and mind-blowing triple-digit growth from AI products. Translation: Alibaba’s cloud game is solid. But here’s the hiccuprevenue grew 5% year-over-year to RMB236.5 billion ($32.7 billion), missing Wall Street’s RMB239 billion expectations. Not great, but not the end of the world either.

Now, let’s talk international. Alibaba’s global commerce is flexing hardrevenues surged 29%, thanks to AliExpress and Trendyol crushing it in cross-border sales. Meanwhile, the domestic scene? Not as rosy. Taobao and Tmall barely eked out 1% growth, with China’s sluggish consumer spending dragging things down. On the bright side, Alibaba is throwing serious cash into its long game: ramping up AI infrastructure, boosting logistics, andget thisbuying back $4.1 billion of its own shares. That’s some real shareholder love right there.

But Wall Street wasn’t feeling the vibe. Shares dipped 3% after the revenue miss, despite the profit fireworks. The bigger picture? Alibaba’s still a player, especially with its cloud and AI moves. But with China’s economy stuck in neutral, it’s a bumpy ride ahead. For investors, the focus is clear: keep an eye on Alibaba’s innovation pipeline and hope China’s economy wakes up from its nap.

This article first appeared on GuruFocus.

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