Alibaba rallies after its AI business provides an earnings lift

Alibaba (NYSE:BABA) reported revenue rose 5% year-over-year to $33.71 billion. Overall revenue excluding Alibaba-consolidated subsidiaries grew over 7% year-over-year for the quarter that ended on September 30, driven by double-digit public cloud growth, including increasing adoption of AI-related products.

The Hangzhou-based company pointed to improving monetization of Taobao and Tmall Group as a positive factor during the quarter. The Cloud Intelligence segment, which includes the AI business, outperformed the company’s overall growth rate during the quarter.

During the quarter, Alibaba (NYSE:BABA) saw online GMV growth supported by double-digit order growth year-over-year, mainly driven by the increase in purchase frequency, partly offset by the decline in average order value. In October and November, Alibaba (BABA) had a successful 11.11 Global Shopping Festival, during which Taobao and Tmall achieved robust growth in GMV and a record number of purchasers

Alibaba’s (BABA) operating margin for the quarter was 15%, which was level with last year’s mark. Adjusted EBITDA fell 3.9% to RMB47.3 billion. Non-GAAP diluted earnings per ADS was reported at RMB15.06 vs. RMB15.63 a year ago.

Looking ahead, Alibaba (BABA) said it would continue to invest in customer growth and in technology, particularly in AI infrastructure, to capture the increasing trend of cloud adoption for AI and to maintain its market leadership. The company also expects the Taobao and Tmall platforms to help accelerate overall growth.

Shares of Alibaba (BABA) tracked 5.16% higher in premarket action on Friday to $95.37 vs. the 52-week range of $66.63 to $117.82.