Alibaba Group Holding will report earnings on Thursday. The Chinese tech giant faces a tough task to put itself back at the forefront of investors’ minds as newly-listed companies have taken the artificial-intelligence spotlight.
Alibaba shares rose in Hong Kong, and US overnight trading.
Alibaba will report its fiscal first-quarter earnings before the U.S. market opens. It is expected to make a net profit of 21.8 billion yuan ($3.23 billion), for the three months ended June, according to a FactSet poll, down from 43.12 billion yuan a year earlier.
However, its quarterly revenue is forecast to rise to 266.78 billion yuan from 247.65 billion yuan a year ago.
That would be in line with Alibaba’s most recent earnings when the company attributed a sharp drop in adjusted earnings to investments in its technology and quick commerce businesses but highlighted its fast-growing cloud-computing revenue, driven by AI demand.
Alibaba has been investing heavily in AI and recently bolstered its war chest by agreeing to sell videogames business Lingxi Games to Asian private-equity firm Trustar Capital for at least $1.5 billion. However, its American depositary receipts and Hong Kong-listed stock have both fallen around 13% this year so far.
Much like in the U.S., the major stock gains in Chinese AI have been reserved for hardware companies rather than model developers. For example, memory-chip maker CXMT listed in July and less than a month later became China’s largest onshore-listed company.
In order to convince shareholders that it belongs in the AI winners’ circle, Alibaba will likely have to show a significant acceleration in cloud-computing growth, while reducing its quick-commerce losses.
