Pivotal moment for strategic transformation
Alibaba is expected to report its second-quarter (Q2) 2026 earnings on the 13th of November 2025, with revenue forecast at CNY242.65 billion, a 2.6% year-over-year (YoY) rise, though pre-tax profit is expected at CNY15.19 billion, down 64.9% YoY.
Earnings per share (EPS) are projected at CNY5.49, down 63.6% from CNY15.06 last year, reflecting the challenging transition period for the company.
Alibaba approaches its upcoming results at a pivotal moment. The company has repositioned itself beyond its historic role as China’s leading e-commerce platform to become increasingly a technology-driven business anchored in cloud, artificial intelligence (AI) and global commerce.
Analysts expect that this quarter will be less about a simple sales beat and more about whether Alibaba can show credible traction in the new growth engines that management has emphasised.
Cloud and AI provide growth offset
In its recent quarter, Alibaba’s cloud and “Cloud Intelligence” unit posted roughly 33 billion yuan in revenue, up about 26% YoY, while related AI-product revenue delivered triple-digit growth.
Meanwhile, the core domestic commerce business continues to face pressure from sluggish consumer spending, deflationary headwinds in China and intense competition in online retail.
Given that backdrop, the key questions for this earnings cycle are whether Alibaba’s new growth initiatives are gaining enough scale to offset this softening in its legacy businesses.
And how that will manifest in margin and free-cash-flow performance as the company invests heavily in technology infrastructure.
Multiple metrics under investor scrutiny
Investors will monitor several metrics closely. The growth rate in cloud & AI is one: can Alibaba maintain or improve the 20-30% cloud growth range and sustain triple-digit growth in AI-related revenues?
E-commerce trends matter too: growth in user-spend on the platforms (Taobao/Tmall) and the monetisation of merchants (software/fees) will be watched for signs of recovery or stability.
Historically, Alibaba’s “customer-management revenue” (merchant services) has lagged growth in gross merchandise volume but is the higher-margin segment.
On the margin side, with heavy investment underway in cloud infrastructure and AI, the question is whether operating margin can hold up and whether free cash flow will recover.
International expansion and capital allocation
Another critical piece is Alibaba’s international digital-commerce business: investors will ask whether growth outside China is accelerating and whether recent developments are producing tangible benefits.
Alibaba announced a plan to raise US$3.2 billion via a convertible bond to fund its cloud expansion and global ambitions, showing commitment to future growth.
While this shows strategic commitment, it also raises questions around capital allocation and when the investments will yield returns that justify the substantial outlays.
In addition, Alibaba’s declared intention to invest more than US$52 billion over the coming years in AI and cloud shows long-term ambition but also implies heightened expectations.
Significant risks cloud outlook
On the risk side, Alibaba remains exposed to macro headwinds: China’s consumer sector remains fragile, retail spending is under pressure, and competitive intensity in commerce and cloud is high.
Trade-policy uncertainty can also affect Alibaba’s international business, particularly as geopolitical tensions affect cross-border operations.
Past quarters showed the company struggle to gain sustained growth in its legacy e-commerce segment despite strong technology momentum.
A further concern is margin erosion: heavy investment in AI infrastructure may compress profitability in the near term before delivering expected returns.
Execution challenges multiply
Moreover, execution risk is non-trivial – scaling cloud infrastructure, monetising AI, and expanding internationally while retaining core commerce strength is a complex balancing act.
The company must navigate regulatory oversight in China, competitive threats from domestic rivals, and the challenges of international expansion simultaneously.
The balance between investing for future growth and maintaining current profitability will be crucial for investor confidence.
Technical analysis and analyst ratings
Year-to-date the Alibaba share price has risen by 93% but over the past five years it is still down around 45%.
This week’s fall through its August-to-November uptrend line at $173.80 on the New York Stock Exchange (NYSE) puts the October trough at $157.25 on the map.