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Alibaba Group Holding (BABA) reported mixed financial results for its fiscal second quarter, with revenue reaching $34.81 billion, a 5% year-over-year increase that exceeded analyst expectations of $34.43 billion. Adjusted earnings per ADS were $0.61, surpassing the $0.49 consensus estimate. The Cloud Intelligence Group achieved 34% revenue growth, driven by public cloud demand and AI adoption, while AI-related products saw triple-digit growth for the ninth consecutive quarter. However, profitability faced significant pressure due to heavy investments in growth initiatives, with adjusted net income declining by 72% to $1.45 billion and adjusted EBITA falling by 78% to $1.27 billion. Free cash flow experienced a notable outflow of RMB 21.8 billion, primarily due to investments in Quick Commerce and AI Cloud infrastructure. Strategically, Alibaba is focusing on long-term growth through investments in Quick Commerce, aiming for $140 billion in gross merchandise value within three years, and its new Qwen AI app, which achieved over 10 million downloads in under a week. The company is also merging its autonomous-driving unit with Zelos Technology to create a $2 billion robovan business. Despite an 81% stock increase over the past year, analysts remain cautious, with some revising price targets downward due to profitability concerns. While Alibaba’s leadership emphasizes the potential of AI and Quick Commerce to drive future growth, near-term profitability challenges and significant investments have tempered market sentiment.
Source content provided by Benzinga.
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About BABA

Alibaba is the world's largest online and mobile commerce company as measured by gross merchandise volume. It operates China's online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). The China retail e-commerce ... Read more

Ways to trade options* on BABA

Bearish Option Strategy: Long Puts

Traders buy a single put option on a stock or ETF. This strategy can benefit from a price drop while risking more capital than a spread.

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