Alibaba Group Holding (NYSE:BABA) shares climbed on Tuesday following its fiscal second-quarter results, as the e-commerce giant co-founded by Jack Ma reported revenue and earnings that exceeded analyst expectations.

The company posted quarterly revenue of $34.81 billion, up 5% year-over-year, surpassing the analyst consensus estimate of $34.43 billion.

On a like-for-like basis, excluding revenue from the divested Sun Art and Intime businesses, Alibaba’s revenue would have grown 15% year-over-year.

Also Read: Alibaba Launches Free ‘Qwen’ AI Assistant, Aiming To Be The ‘Everything App’ For Work And Life

The adjusted earnings per American Depositary Share (ADS) came in at 61 cents, topping the analyst consensus estimate of 49 cents.

Adjusted net income declined 72% to $1.45 billion, while adjusted EBITA slipped 78% year-over-year to $1.27 billion, reflecting investments in Taobao Instant Commerce and enhancements to user experiences, acquisitions, and technology.

Net income, however, fell 53% year-over-year, primarily attributable to the decrease in income from operations.

Segment Performance

Alibaba’s China E-commerce Group revenue rose 16% to $18.62 billion. To drive synergies across Alibaba’s ecosystem, the segment accelerated onboarding of Tmall brands to its quick commerce channel, expanding product selection for on-demand delivery.

By October 31, 2025, it had onboarded offline stores from about 3,500 Tmall brands.

Rapid growth in monthly active consumers on the Taobao app--supported by rising quick commerce popularity--also drove incremental revenue.

Its 11.11 Global Shopping Festival achieved double-digit year-over-year consumer growth on the Taobao app.

Its 88VIP member base--its highest-spending consumers--continued to grow at a double-digit rate year-over-year, surpassing 56 million.

Alibaba International Digital Commerce Group reported a 10% increase in revenue to $4.89 billion. The segment expanded and diversified product offerings by onboarding more local merchants and partners and leveraging Alibaba’s supply chain advantages.

AliExpress scaled its “AliExpressDirect” model with local inventories in more than 30 countries and launched the “Brand+” program to help Chinese brands expand overseas.

It also boosted AI adoption in its international wholesale business, and its AI-powered B2B procurement engine, Accio, released an AI Agent version to significantly improve sourcing and procurement.

Cloud Segment Sees Strong AI-Driven Growth

The Cloud Intelligence Group posted a 34% revenue increase to $5.59 billion driven by strong public cloud demand and growing AI product adoption.

In September at the Apsara Conference, Alibaba Cloud launched a major upgrade to its full-stack AI offerings -- from advanced foundation models to high-performance infrastructure such as servers, networking, distributed storage, computing clusters, PAI, and model training and inference services.

Alibaba Cloud also strengthened open-source engagement, with more than 180,000 derivative Qwen models on Hugging Face as of October 31, 2025, more than double the second-largest contributor.

Omdia’s “AI Cloud Market: China – 1H25” ranked Alibaba Cloud No. 1 in China’s AI cloud market with a 35.8% share.

Cash Position, Investments, and Workforce

Alibaba’s cash position remained robust, with $80.61 billion in cash and equivalents as of September 30, 2025.

The company generated an operating cash flow of $1.42 billion, down 68%, and free cash flow was an outflow of $3.07 billion, primarily reflecting cloud infrastructure spending and investments in Taobao Instant Commerce.

As of September 30, 2025, Alibaba had a total of 126,661 employees, compared to 123,711 as of June 30, 2025.

Alibaba’s leadership said the company is deep into an investment cycle aimed at building long-term value in AI, cloud infrastructure, and a unified consumption platform spanning daily services and e-commerce.

CEO Eddie Wu highlighted strong momentum across Alibaba’s two core pillars--AI + Cloud and consumption--with Cloud Intelligence revenue rising 34% and AI-related product revenue posting triple-digit growth for the ninth straight quarter.

The consumption segment also showed progress, with quick-commerce operations improving unit economics and lifting monthly active users on the Taobao app.

CFO Toby Xu added that AI revenue now represents a growing portion of external cloud sales, while customer management revenue increased 10%.

He noted that Alibaba is reinvesting profits and free cash flow to support long-term growth, leading to fluctuation in near-term profitability.

Price Action: BABA shares were trading higher by 4.07% to $167.26 premarket at last check Tuesday.

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