Alibaba profits slump 75%

Alibaba just pulled off a massive balancing act: profits plunged 75% as the company poured cash into AI infrastructure, but rather than slam the brakes, it doubled down—raising HK$80 billion (about US$10.2 billion) in a discounted share sale to keep its AI roadmap on track. The stakes are high: Alibaba’s e-commerce engine is slowing, but its AI cloud revenue is surging, up 45%—the best in 22 quarters. The company is betting that building in-house chips and scaling cloud services now will pay off in 2–3 years, even if it means short-term pain for shareholders.

But here’s the catch: funding the AI push came at a cost. Existing investors face about 3.6% dilution and immediate earnings pressure, while the stock price took a hit. At the same time, Alibaba agreed to sell off Lingxi Games, its largest gaming asset, signaling that anything unrelated to AI, cloud, or commerce is expendable. The company is trading steady cash flow from non-core assets for more firepower in its AI arms race—an all-in bet that these investments will tip the margin story in their favor before the cash runs dry.

Featuring insights from CEO Eddie Wu and Chairman Joe Tsai, plus on-the-ground reporting from sources close to the deal, this episode breaks down where Alibaba’s AI gamble might lead—and what it means for the future of Chinese tech.

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