Alibaba Shares Slip After Missed Revenue Estimates

August 29, 2025, HANGZHOU/New York (Reuters) - Alibaba Group Holding Limited (NYSE: BABA) fell short of market projections for its first-quarter revenue on Friday, as its core e-commerce division struggled with intense competition and subdued consumer spending, overshadowing gains in its cloud computing business.

For the quarter ended June 30, Alibaba reported total revenue of 247.65 billion yuan ($34.62 billion), below analysts’ consensus forecast of 252.92 billion yuan, according to data from LSEG. In pre-market trading, the company’s U.S.-listed shares slid 1.5%.

Despite the overall shortfall, Alibaba’s Cloud Intelligence Group delivered robust growth, with revenue rising 26% to 33.40 billion yuan, outperforming the 18.4% increase anticipated by analysts. The cloud unit has benefited from a surge in demand for artificial intelligence services, as more enterprises integrate AI into their operations.

In contrast, Alibaba’s e-commerce segment faced headwinds from fierce competition and cautious consumer sentiment amid China’s ongoing property market challenges and sluggish economic growth. Companies across the sector have resorted to deep discounts and promotions to spur demand, but overall spending remained muted.

Alibaba continues to invest heavily in generative AI, recently unveiling a feature that transforms portrait images into realistic video avatars. The company also repurchased approximately 5% of its shares for $11.9 billion in fiscal 2025, underscoring management’s confidence in its long-term valuation.

Analysts expect Alibaba’s revenue and adjusted earnings before interest, taxes, depreciation, and amortization to grow at respective compound annual rates of 7% and 11% from fiscal 2025 through fiscal 2028, driven by expansion in e-commerce, cloud, and AI offerings. A thaw in U.S.-China trade tensions could further boost the stock, which trades at roughly 2x projected sales and 8x adjusted EBITDA for the current fiscal year.