Alibaba Group Holding Limited (BABA) reported its fiscal Q4 2026 results on May 13, showing a 3% increase in group revenues to RMB 243.4 billion. Notably, its cloud division generated RMB 41.6 billion, a 38% year-over-year growth. This was driven primarily by AI-related product revenues, which reached RMB 8.9 billion, accounting for 30% of external cloud revenues. However, overall adjusted EBITA plummeted 84% to RMB 5.1 billion, and non-GAAP net income fell to just RMB 86 million, a staggering 99.7% decrease due to increased spending on AI and user experience.
In comparison, competitors Amazon and Microsoft are also expanding their cloud services, with Amazon Web Services generating $37.6 billion in revenue for a 28% year-over-year increase, while Microsoft’s Azure experienced 40% growth. Alibaba’s stock has seen a decline of 11.6% so far this year, underperforming broader industry benchmarks, and is currently trading at a trailing P/E ratio of 40.97, above the industry average of 32.29.
The Zacks Consensus Estimate for Alibaba’s earnings per share for fiscal 2027 is $7.43, reflecting a 91% year-over-year increase despite a recent 4.6% downward revision in estimates. The company maintains a Zacks Rank of #4, indicating a “Sell” recommendation.
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