On August 21, Alibaba fell 3.97% in regular trading, trading at $124.5/share, with turnover of $218 million. The decline follows the company's Q1 FY2027 earnings report released on August 20, where profits came in significantly below expectations due to aggressive AI capital expenditure.
Alibaba reported revenue of 268.95 billion yuan, up 9% year-over-year and slightly above consensus. However, GAAP net profit attributable to shareholders plunged 76% year-over-year to 10.54 billion yuan, while adjusted net profit of 20.72 billion yuan missed the market estimate of 25.58 billion yuan. The shortfall was driven by quarterly capital expenditure of 67.68 billion yuan, surging 75% year-over-year as the company accelerates AI infrastructure buildout.
Despite the profit miss, Alibaba Cloud external revenue grew 45%, hitting a 22-quarter high, with AI-related product revenue sustaining triple-digit growth for 12 consecutive quarters. Management stated AI capex investments are expected to break even within three years. Multiple brokerages including Jefferies and Daiwa raised target prices, citing sustained cloud acceleration, though near-term profit erosion from AI spending continues to weigh on sentiment.
(The above content is based on publicly available market information, generated by a program or algorithm, and is intended solely as a stock movement alert. It does not constitute investment advice or a basis for trading decisions.)
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