By Adam Clark
Alibaba Group Holding stock was rising on Wednesday as reports of potential progress on lowering U.S.-China tariffs outweighed a mixed earnings report.
Alibaba's American depositary receipts were up 6.6% in morning trading.
The ADRs were reversing earlier losses amid optimism that the summit between President Donald Trump and Chinese leader Xi Jinping will lead to lower import duties. The U.S. and China have both identified around $30 billion worth of goods where they could cut tariffs, Reuters reported.
Other U.S.-listed shares of Chinese companies were also rising. JD.com ADRs were up 7.1%, and Baidu ADRs were rising 7.2%.
Alibaba on Wednesday reported a fiscal fourth-quarter net profit of 23.50 billion yuan ($3.41 billion), nearly double from the same period a year earlier due to gains on investments.
However, adjusted net income came to CNY 86 million, plummeting nearly 100% year over year from CNY 29.85 billion. Adjusted earnings before interest, taxes and amortization fell 84% to CNY 5.10 billion.
Alibaba attributed the drop in adjusted earnings to investments in its technology and quick commerce businesses.
Revenue rose 3% to CNY 243.38 billion from the same period a year earlier. Excluding revenue from disposed businesses, revenue on a like-for-like basis would have grown by 11% year-over-year.
"Alibaba's full-stack AI investments have progressed from incubation to commercialization at scale. This quarter, we achieved accelerated breakthroughs across models, cloud infrastructure, and applications," said Alibaba CEO Eddie Wu in a statement. "Cloud Intelligence Group's external revenue growth accelerated to 40%, with AI-related products accounting for 30% of this revenue."
Alibaba reported 1% revenue growth for its E-Commerce Group, which makes up the majority of its sales. Its Cloud Intelligence Group revenue climbed 38%.
"Overall, this was a mixed-to-negative print: revenue was only modestly light, but profitability and cash flow were the real issues," wrote Vinci Zhang, a research analyst at data firm M Science.
"Cloud remains one of the cleanest positives in the story. The segment missed our more bullish estimate, but external cloud growth accelerated to 40%, and AI revenue is now a material part of the business," Zhang added.
Alibaba and rivals JD and Meituan have been waging a price war, especially in food delivery, which has hampered profits across the Chinese internet sector even as revenue rises. JD reported its own earnings on Monday, showing growing profit for its core retail business despite the fierce food-delivery competition.
Investors are watching to see how quickly Alibaba can reduce its quick-commerce losses -- including its food-delivery business -- and how fast AI spending and revenue are increasing.
"The unit economics and average order value of quick commerce steadily improved. We are confident in our business outlook and will continue to invest in AI + Cloud to strengthen our competitive advantages," wrote Alibaba Chief Financial Officer Toby Xu in a statement.
Benchmark Research analyst Fawne Jiang said revenue growth was broadly in line with expectations and reiterated a Buy rating and $220 target price on Alibaba's ADRs.
"While near term investment may pressure underlying margins, we view AI as a durable multi year growth driver supporting both revenue growth and longer-term margin expansion for Alibaba," Jiang wrote in a recent research note before the earnings report.
Write to Adam Clark at adam.clark@barrons.com
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(END) Dow Jones Newswires
May 13, 2026 10:41 ET (14:41 GMT)
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