Alibaba’s two flagship marketplaces, Taobao and Tmall, accounted for 45% of consolidated revenue in fiscal 2025 and generated more than 100% of its adjusted EBITDA, thanks to a 44% EBITDA margin on combined operations. While domestic e-commerce remains the core profit engine, Alibaba’s cloud infrastructure business posted 34% year-over-year revenue growth in the latest quarter, outpacing the 15% top-line gain in its continuing operations. That cloud unit, already one of the few non-e-commerce profit centers, now underpins the company’s AI ambitions and contributes materially to overall gross margin, which stood at 40.7% in fiscal 2025.

Since 2021, Chinese antitrust measures have curtailed Alibaba’s ability to lock in merchants with exclusivity clauses and loss-leading promotions, opening the door for competitors Pinduoduo and JD.com to gain market share. In response, Alibaba has leaned more heavily on its overseas marketplaces—Lazada in Southeast Asia, Trendyol in Turkey, Daraz in South Asia and AliExpress globally—and its Cainiao logistics network. While these businesses drive top-line growth, they operate at lower margins and remain unprofitable, compressing consolidated profitability. Analysts project Alibaba’s revenue and EPS to grow at CAGRs of 8% and 11%, respectively, from fiscal 2025 through fiscal 2028, reflecting stabilization in domestic marketplaces alongside international margin pressures.

Alibaba has committed over $17 billion in capital expenditures on AI and cloud infrastructure in the trailing 12 months, supporting nine consecutive quarters of triple-digit year-over-year growth in AI-related product revenue. The company’s in-house large language model rollout powers AI-driven merchant recommendations, logistics optimization and autonomous driving trials. Management expects AI tailwinds to accelerate cloud adoption and reinvigorate Taobao and Tmall with enhanced personalization tools. With a strong free-cash-flow profile—bolstered by e-commerce dividends and 14 straight quarters of share repurchases—Alibaba can self-finance these AI initiatives without dilutive equity issuance, positioning it as a long-term growth play despite its slower overall growth relative to earlier years.