Alibaba Group reported strong progress in AI for the December quarter, with accelerating revenue growth in the Cloud Intelligence Group and significant momentum in consumer AI adoption led by the Qwen App.
Excluding disposed businesses, the Group’s total revenue grew 9% to RMB284,843 million (US$40,732 million) year-over-year on a like-for-like basis. The company is scaling its strategic investments in AI and Cloud and has made progressive moves toward organizational realignment.
“Looking ahead, we are well-positioned to drive growth on both enterprise AI and consumer AI fronts, powered by our full-stack AI capabilities spanning foundation models, cloud infrastructure, and proprietary chips, alongside deep integration with our broader ecosystem,” said Eddie Wu, Chief Executive Officer of Alibaba Group.
“Our strong liquidity position and resilient cash generation provide a solid foundation to support sustained strategic investment,” said Toby Xu, Chief Financial Officer of Alibaba Group.
AI continued to serve as a growth engine, driving Cloud Intelligence Group revenue up 36% to RMB43,284 million (US$6,190 million), with AI-related product revenue delivering triple-digit growth for the tenth consecutive quarter.
Central to Alibaba’s AI offering is the Qwen model family. In February, Alibaba launched Qwen3.5, which delivered impressive performance across reasoning, coding, agentic tasks, and multimodal understanding. The Qwen suite has become the world’s most widely used open-source model family, surpassing one billion cumulative downloads on Hugging Face as of January 21, 2026.
A highlight for the quarter is the Qwen App, which marks a pivotal milestone in Alibaba’s AI strategy. By translating frontier model leadership capabilities into scalable, real-world applications, consumer-facing Qwen surpassed 300 million monthly active users across all platforms as of February, demonstrating strong consumer adoption.
Complementing its foundation models, Alibaba’s chip design subsidiary T-Head has brought proprietary GPUs into scaled production. These GPUs support end-to-end AI workloads, from training and fine-tuning through to inference, strengthening Alibaba’s long-term computing capacity. By integrating T-Head’s chip capabilities with Qwen models and cloud infrastructure, Alibaba delivers highly cost-effective AI services to external customers.
This vertical integration, spanning proprietary chips, cloud infrastructure, frontier models and application-layer platforms, is increasingly recognized as a structural competitive advantage. Morgan Stanley’s latest research, “China’s Emerging Frontiers,” names Alibaba a Top Pick, citing its ability to optimize the entire AI value chain and drive monetization across both infrastructure and applications. The analysis reinforces remarks from Joe Tsai, Chairman of Alibaba Group, who noted at the World Government Summit 2026 that integrated, full-stack companies hold a significant competitive advantage in generating lasting commercial value.
To capitalize on the AGI inflection point, Alibaba recently formed the Alibaba Token Hub (ATH), a dedicated business group led by Eddie Wu. ATH consolidates the company’s AI capabilities under a unified mandate: to create, deliver, and apply tokens. A central pillar is the MaaS (Model-as-a-Service) Business Line, which focuses on building an efficient, open platform and technical infrastructure to power AI ecosystem across industries.
“Our Model-as-a-Service (MaaS) platform is showing strong growth, emerging as a new engine driving cloud business growth,” as Eddie noted.
This newly created Wukong Business Unit extends this strategy into the enterprise, embedding frontier model capabilities directly into business workflows to convert Alibaba’s MaaS leadership into tangible operational efficiency for customers.
Alibaba Cloud also retained its position as a Leader for the sixth consecutive year in the 2025 Gartner® Magic Quadrant™ for Cloud Database Management Systems.
The quick commerce business recorded 56% revenue growth during the quarter. It continued to improve unit economics and grow average order value month-over-month, driven by fulfillment logistics efficiency improvements, order mix optimization, and strong customer retention.
Taobao Instant Commerce service has been embedded in the Qwen App, enabling users to place delivery orders via conversational AI. Growing Qwen user adoption translated into real-world impact during the recent Chinese New Year holiday, with the app facilitating nearly 200 million orders for holiday shopping, travel booking and entertainment planning, fostering new AI-driven consumption habits and marking a significant step in the Group’s consumer AI strategy.
Alibaba China E-commerce Group recorded 6% growth to RMB159,347 million (US$22,786 million), maintaining its competitive position through healthy user growth. The Taobao app achieved double-digit year-over-year growth in monthly active consumers during the quarter, while 88VIP membership continued to increase by double digits year-over-year, surpassing 59 million.
AIDC narrowed losses significantly year-over-year during the quarter, driven by logistics optimization and improved investment efficiency. By leveraging supply chain advantages of Alibaba’s broader ecosystem, AIDC continued to diversify and expand its product offerings, and strengthen its competitive position in cross-border commerce.
Alibaba enters the next phase from a position of compounding advantage. With full-stack AI capabilities now deeply integrated across its consumer, enterprise and cloud businesses, the company is translating model leadership into measurable commercial outcomes, at scale, and across multiple fronts simultaneously.
This article was originally published on Alizila written by Alizila Staff.
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