Alibaba's Resilience: How the Tech Giant Overcame Tepid Consumer Spend in China

• Alibaba said net income rose 58% year-on-year over the quarter ending Sept. 30, on the back of the performance of its investment portfolio.
• Revenue, meanwhile, came in at 236.5 billion yuan (≈ 32.68 billion USD), 5% higher year-on-year but below an analyst forecast of 238.9 billion yuan ( ≈ 33.02 billion USD), according to LSEG data.
• The results come at a tricky time for Chinese commerce businesses due to the widespread economic slowdown in the world's second-largest economy.

Asian online retail giant Alibaba surpassed earnings forecasts in the third quarter, yet revenue missed targets amid weak consumer demand in China's slowing economy.

Alibaba said net income rose 58% year on year to 43.9 billion yuan ($6.07 billion) in the company's quarter ended Sept. 30, on the back of the performance of its equity investments. This compares with an LSEG forecast of 25.83 billion yuan.

"The year-over-year increases were primarily attributable to the market value adjustments in equity holdings, decrease in impairment of our investments and increase in income from operations," the company said of the annual profit jump in its earnings statement.

Revenue, meanwhile, came in at 236.5 billion yuan, 5% higher year on year but below an analyst forecast of 238.9 billion, according to LSEG data.

The firm's NYSE-traded stocks have risen this year, showing a 13% increase. This shares declined over 2% during early Friday trading, following the announcement of quarterly results.

Investors are closely watching the performance of Alibaba's main business units, Taobao and Tmall Group, which reported a 1% annual uptick in revenue to 98.99 billion yuan in the September quarter.

The results come at a tricky time for Chinese commerce businesses, given a tepid retail environment in the country. Chinese e-commerce group JD.com also missed revenue expectations on Thursday, according to Reuters.

Markets are now watching if Beijing's recent economic initiatives, including last week's announced 1.4 trillion yuan five-year plan, will help resuscitate the country's growth and curtail a long-lived real estate market slump. 

The impact on the retail space looks promising so far, with October's sales surging 4.8% compared to last year, exceeding forecasts, while China's recent Singles' Day shopping holiday — widely seen as a barometer for national consumer sentiment — regained some of its luster.

Alibaba highlighted "strong performance" in gross merchandise volume — a sector metric tracking sales trends that differs from company revenue — across its Taobao and Tmall Group platforms during the event, alongside an "unprecedented level of participating shoppers."

“Alibaba’s outlook remains closely aligned with the trajectory of the Chinese economy and evolving regulatory policies,” ING analysts said Thursday, noting that the company’s Friday report will shed light on the Chinese economy’s growth momentum.

The e-commerce giant’s overseas online shopping businesses, such as Lazada and Aliexpress, meanwhile posted a 29% year-on-year hike in sales to 31.67 billion yuan.  

Alibaba’s Cloud Intelligence Group reported year-on-year sales growth of 7% to 29.6 billion yuan in the September quarter, compared with a 6% annual hike in the three-month period ended in June. The slight acceleration comes amid ongoing efforts by the company to leverage its cloud infrastructure and reposition itself as a leader in the booming artificial intelligence space.

“Growth in our Cloud business accelerated from prior quarters, with revenues from public cloud products growing in double digits and AI-related product revenue delivering triple-digit growth. We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth,” Alibaba CEO Eddie Wu said in a statement Friday.

Following the extensive 2022 regulatory clampdown by Chinese authorities on major digital and technology firms, Alibaba restructured its division's management and positioned it for future expansion, intensifying its rivalry with domestic players like Baidu and Huawei, while also competing against U.S. giants Microsoft and OpenAI.

After launching its ChatGPT-equivalent Tongyi Qianwen last year, Alibaba recently introduced an AI-enhanced search solution for small enterprises in European and American markets, while also securing a significant five-year cloud services agreement with Indonesian technology powerhouse GoTo in September.

According to a report from [CNBC](https://www.cnbc.com/2024/11/15/alibaba-baba-q2.html)

1. uptick: (n) a trade of shares at a higher price than that of its previous trade. Ex: The general rule is that shares can be sold short only on an uptick.

2. tepid: (adj) a feeling, reaction etc that is tepid shows a lack of excitement or interest.

3. resuscitate: (v) to make someone breathe again or become conscious after they have almost died. Ex: mouth-to-mouth resuscitation (=when you breathe air into someone’s mouth to make them breathe)