Alibaba’s Q2 2025 Earnings Reveal Strong Cloud Growth Amid Competitive E-commerce Landscape
Alibaba Group Holding Limited reported its Q2 2025 earnings with mixed results, highlighting robust growth in its cloud computing division amid intense competition in China’s instant commerce space. The company posted a revenue of 247.65 billion Chinese yuan (about $34.6 billion), a 2% year-on-year increase, slightly below analyst expectations of 252.9 billion yuan. However, net income rose significantly by 78% to 43.11 billion yuan, boosted by gains in equity investments and the sale of Turkish e-commerce firm Trendyol.
The standout performer was Alibaba’s cloud computing unit, which saw a 26% revenue increase to 33.4 billion yuan, accelerated from the previous quarter’s 18% growth. This segment is crucial for Alibaba’s AI monetization strategies, with AI-related products maintaining triple-digit year-over-year growth for the eighth consecutive quarter. Adjusted earnings before interest, taxes, and amortization (EBITA) in the cloud unit rose by 26% year-over-year, underscoring its profitability momentum.
Conversely, Alibaba’s core e-commerce business experienced pressure as investments in ‘quick commerce’ escalated. The e-commerce unit’s revenue grew 10% year-on-year to 19.6 billion yuan, mainly driven by customer management revenue (CMR), which jumped 10%. However, adjusted earnings in this division fell 21% year-over-year due to significant spending to capture fast delivery market share, competing with rivals such as Meituan and JD.com.
Despite challenges from competition and a cooling Chinese economy, Alibaba’s strategic focus on AI and cloud, alongside international market growth, has earned investor confidence. Its U.S.-listed shares rose more than 40% in 2025, supported by improved profitability and expanded shareholder returns, including an aggressive share buyback program totaling $11.9 billion.
This analysis of Alibaba’s latest financial performance suggests the company is balancing growth investments strategically while capitalizing on Asia’s fast-evolving digital economy.
