Alibaba Reports 5% Revenue Growth, Driven by AI and Cloud Expansion

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Alibaba Group (BABA, Financials) posted a 5% year-over-year increase in revenue for the quarter ending Sept. 30, reaching $33.71 billion.

Growth was over 7%, excluding revenue from consolidated subsidiaries, driven by strong Cloud Intelligence performance and rising AI product usage.

Improvements in Taobao and Tmall monetization drove the quarter. Cloud Intelligence, including AI, outpaced Alibaba's growth rate, helping performance.

Gross merchandise volume increased due to double-digit order increases. However, the average order value fell, slightly offsetting gains. Taobao and Tmall saw record GMV and sales during the 11.11 Global Shopping Festival in October and November.

Alibaba reported a 15% operating margin, unchanged from last year. Adjusted EBITDA fell 3.9% to 47.3 billion yuan ($6.47 billion). Non-GAAP diluted profits per American Depositary Share were 15.06 yuan ($2.06), down from 15.63 yuan ($2.14) the previous year.

To meet the rising demand for cloud-based AI solutions, the firm will invest in customer growth and technology, notably AI infrastructure; Tmall and Taobao could boost growth in the coming quarters.

Alibaba also recently reported strong sales during the Singles' Day shopping festival, with 45 brands, each exceeding 1 billion yuan in gross product value. Strong customer involvement was shown by a 26.6% rise in sales across the main e-commerce sites.

Alibaba keeps negotiating a difficult regulatory environment in China, meeting compliance criteria and adjusting to new rules influencing the technology and e-commerce industries.

BABA shares traded at $87.99 on Friday, down 2.9%.

This article first appeared on GuruFocus.