Alibaba Group (BABA) reported a significant decline in profitability in its fiscal third-quarter 2026 results. Total revenues reached RMB 284.8 billion ($41.3 billion), reflecting a modest 2% year-over-year growth. In contrast, operating profit dropped 74% to RMB 10.6 billion, and free cash flow plummeted 71% to RMB 1.1 billion, attributed mainly to escalating capital expenditures on cloud infrastructure and quick commerce investments.
Over the past four quarters, Alibaba invested about RMB 120 billion in AI and cloud initiatives but faces a challenging outlook, with management indicating that positive cash flow from its quick commerce segment may not occur until fiscal 2028, pushing overall profitability even further to fiscal 2029. Despite strong revenue growth in its Cloud Intelligence Group, which rose 36% to RMB 43.3 billion, the company continues to struggle under the weight of its capital outlays and a competitive cloud landscape dominated by Amazon, Microsoft, and Google.
BABA shares have fallen 32.7% in the past six months, diverging from the broader market’s decline of 3.9%. The Zacks Consensus Estimate projects a steep 41.62% dip in Alibaba’s fiscal 2026 earnings to $5.26 per share, indicating investor skepticism about the company’s ability to recover in the near term.
