Alibaba has committed over $53 billion to AI development and set a target to generate more than $100 billion in combined cloud and AI external revenue within five years, reflecting its strategy to offset softening e-commerce performance with high-growth technology services.

The company introduced its agentic AI service, Wukong, while raising cloud and storage prices by as much as 34%, aiming to improve margins on AI offerings after ten consecutive quarters of triple-digit AI-related revenue growth in its cloud division.

For the quarter ended December, Alibaba reported a 2% sales increase to 284.8 billion yuan and a 67% drop in net income, prompting shares to slide 7.1% on investor concerns over heavy promotional spending and slower e-commerce growth.

Alibaba consolidated its AI units under a new Token Hub business group led by CEO Eddie Wu and stated quick commerce could reach profitability by fiscal year 2029, while competition from Tencent and open-source AI providers underscores the challenges ahead.