AIibaba Focuses on Agentic Commerce as AI Spending Balloons

Alibaba is focusing on agentic commerce innovations as it spends heavily on artificial intelligence.

The Chinese tech giant shared quarterly earnings results Thursday (Aug. 20) that showed revenue up 9% for the year, while its AI investments drove a 75% decline in net income.

External revenue from Alibaba’s cloud business was up 45%, while AI-related product revenue saw triple-digit growth for the 12th quarter in a row, CEO Eddie Wu said in the company’s earnings press release.

“With our full-stack AI strategy, we have put Alibaba in a superior position to capture the substantial growth of demand for artificial intelligence and AI compute,” Wu said in the release.

Alibaba’s capital expenditures, which include its AI infrastructure investments, surged 75% to 67.7 billion yuan (about $10 billion).

During an earnings call, the company, which has its roots in eCommerce but has become increasingly focused on AI, discussed how proprietary technology is beginning to transform shopping habits and merchant operations.

A key pillar of the shift is the deployment of AI directly into the retail ecosystem. So far, 250 million users have completed their first AI-driven shopping experience using the company’s flagship Qwen model, Wu said.

The company sees “significant opportunities for AI” on both the supply and demand sides of eCommerce, Wu said during the call. On the consumer side, that means launching “new experiences and scenarios” powered by AI, like multimodal search and virtual try-ons.

“Our goal is twofold,” Wu said. “First, to use AI technology to enhance the experience and efficiency of existing shopping scenarios. And we’ve already observed that AI has driven significant efficiency gains in our product recommendations. And secondly, to drive new kinds of AI-driven interactions.”

As for the supply side, Alibaba has seen that merchants are already “widely adopting” AI into their operations, Wu said during the call. The company is exploring ways to use the technology “across various operational links” to improve merchant capabilities, especially in data analytics, advertising and marketing, and customer service “where merchants can derive clear benefits.”

“And going forward, we’ll also collaborate with Qwen Office to launch AI agents that are specifically tailored for eCommerce scenarios,” Wu said.

Speaking more broadly about the company’s AI efforts, Wu said Alibaba’s investment model is “fundamentally different from that of pure-play AI companies,” as its strategy involves chips, cloud infrastructure and AI models.

The earnings results came days after a report that Alibaba’s open-weight models had become the top AI offerings in the world. The company’s models have seen more than 3 billion downloads worldwide in the last six months, more than those from Google, Meta and Alibaba’s domestic rivals like DeepSeek.

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