Alibaba earnings preview: Can the Chinese tech giant balance growth with profitability?
Alibaba reports quarterly earnings on 18 February, with investors focused on cloud revenue, AI monetisation and e-commerce performance amid strategic investments.
Alibaba earnings preview: Can the Chinese tech giant balance growth with profitability?
Alibaba is approaching its next quarterly earnings report scheduled for 18 February 2026, offering investors a pivotal update on how the Chinese e-commerce and cloud giant has navigated a dynamic operating environment marked by slowing core retail growth, heavy strategic investments and accelerating adoption of cloud and artificial intelligence (AI) capabilities.
Alibaba is expected to report higher revenue, but lower pre-tax profit and earnings per share compared to quarter three (Q3) 2025 results.
- Revenue: RMB 290.98 billion, around 3.9% above its Q3 2025 RMB280.15 billion result
- Pre-tax profit: RNB33.93 billion, around 44% lower compared to a year ago
- Earnings per share (EPS): RMB12.46, around 42% lower than a year ago
After a strong - near 48% - rally in the Alibaba share price over the past year despite several quarters of mixed results, the company’s upcoming release will be a key signal on whether Alibaba’s transition into AI-enabled commerce and cloud monetisation is translating into sustained revenue growth and profitability.
Revenue mix shifting towards high-growth segments
Investors will be looking for further evidence that Alibaba’s revenue mix is shifting towards higher-growth segments, even if headline profit margins remain under pressure from strategic spending.
In the most recent prior earnings, Alibaba reported solid revenue but lower earnings growth in its second quarter (Q2) of fiscal 2026, with revenue up about 5 percent year-on-year (YoY) and adjusted EPS slipping despite its international commerce and cloud businesses gaining traction.
Cloud revenue, including AI-related products, showed consistent double-digit growth, a trend expected to continue in the upcoming figures given ongoing enterprise demand for AI infrastructure.
Cloud and AI segment takes centre stage
The cloud and AI segment will be a central focus for the February release. In its Q2 2026 earnings call, Alibaba highlighted a 34.5% increase in cloud revenue and robust external customer adoption, while AI-related products maintained triple-digit growth momentum and quick commerce revenue surged.
However, strategic investments in cloud infrastructure and quick commerce weighed on margins and free cash flow, leading to a significant drop in adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) and a free-cash-flow outflow as the company prioritised scale and market share.
This dynamic sets up a core tension for the Q3 results: can Alibaba maintain high-growth segments without further eroding profitability, or are costs rising faster than monetisation?
E-commerce performance remains crucial
Consumer demand and core e-commerce performance will also be under scrutiny. Domestic consumption in China has remained mixed, with Taobao and Tmall’s growth relatively modest compared with Alibaba’s international retail and digital commerce segments.
Markets will closely watch whether Alibaba’s initiatives - such as AI-driven marketing tools and loyalty programmes like 88VIP - are yielding tangible improvements in merchant take rates and gross merchandise value, thereby lifting overall platform revenues.
The effectiveness of Alibaba’s competitive positioning against rivals such as JD.com and PDD Holdings in both domestic and international markets will further shape sentiment.
Cost control and investment balance
Beyond near-term revenue, cost control and guidance will be important. Alibaba has been clear in prior updates that it is prepared to absorb near-term profitability headwinds as it builds longer-term capabilities in cloud, AI and quick commerce.
Investors will be sensitive to management’s commentary on capex guidance, the pace of strategic spend and expectations for margin normalisation in the second half (H2) of 2026.
Balance sheet strength and cash generation
The balance sheet and cash flow profile will round out the story. While Alibaba has a strong liquidity buffer, recent financial disclosure showed adjusted EBITDA pressure and investment-led cash outflows.
How management balances spending with shareholder returns or operational discipline in the coming quarters could influence valuation, especially as markets increasingly price companies based on sustainable earnings rather than headline growth.
Analyst ratings and technical analysis
Fundamental analysts rate Alibaba, as a solid ‘buy’, averaging a long-term consensus price target of $198.42, implying around 19% upside from current levels as of 11 February 2026, according to LSEG Data & Analytics.
Alibaba LSEG Data & Analysis chart
Alibaba also has a TipRanks ‘strong buy’ rating with a SmartScore of ‘6 Neutral’.
Alibaba TipRanks Smart Score chart
The Alibaba share price - up around 14% year-to-date (YTD) – has been range trading above the $145 region for the past five months. While the $145.27 early January low underpins, the medium-term uptrend is deemed to remain intact.
Alibaba daily candlestick chart
A rise above the October peak at $192.67, a level last traded since August 2021, may engage the psychological $200 region as well as the January to June 2018 peaks at $206.20 - $211.70.
Alibaba monthly candlestick chart
What the earnings release means for investors
In summary, Alibaba’s upcoming earnings release on the 18 February 2026 will be judged on three broad axes: revenue quality across core commerce and high-growth cloud/artificial intelligence (AI) segments, progress in monetising new strategic initiatives without excessive cost escalation, and clarity on forward guidance that bridges near-term investment with medium-term profitability.
A strong top-and-bottom-line performance with healthy segment momentum could reinforce confidence in Alibaba’s pivot towards technology-driven growth, while any signs of slower adoption, rising cost pressure or weaker consumer demand could temper sentiment for the broader China internet sector.
How to trade or invest in Alibaba
Investors interested in Alibaba have several options for gaining exposure to Chinese technology. Here's how to approach trading or investing:
- Research Alibaba's latest results, strategic initiatives and Chinese technology sector trends thoroughly. Understanding regulatory environment and competitive dynamics helps inform investment decisions. Trading for beginners provides useful background.
- Choose whether you want to trade or invest in Alibaba. Spread betting and CFD trading allow speculation on both rising and falling prices.
- Open an account with a broker offering access to international shares including Chinese ADRs or Hong Kong-listed stocks.
- Search for Alibaba on your chosen trading platform. The company trades as BABA in New York and 9988 in Hong Kong.
- Place your trade based on analysis and risk tolerance. Use stop-loss orders to manage downside risk, particularly with volatile international stocks subject to regulatory and geopolitical risks.
Remember that Chinese technology stocks carry unique risks including regulatory uncertainty and geopolitical tensions. Only invest capital you can afford to lose, and maintain diversification across geographies and sectors alongside any Chinese equity exposure.
Important to know
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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