Alibaba's Turnaround: Cloud Soars, E-commerce Stabilizes

In the first quarter of 2026, Alibaba demonstrated real progress in its turnaround efforts. While revenue was up just 2% year-over-year, the actual growth after adjusting for business disposals was closer to 10%. This performance was a result of stable growth in the core e-commerce business and the accelerating growth in the cloud computing segment.

Alibaba's cloud revenue surged 26% year-over-year, powered by soaring demand for AI infrastructure and services. The company's AI product revenue has now grown at triple-digit rates for eight consecutive quarters, indicating that the cloud business is becoming a legitimate growth engine.

Furthermore, Alibaba's restructuring efforts to streamline the business continue to pay off. The company combined Taobao, Tmall, Ele.me, and Fliggy into one commerce division, aiming to unify customer touchpoints, reduce duplication, and sharpen focus - especially in competitive battlegrounds like instant delivery. These efforts are likely to lead to better focus and improved long-term execution.

However, investors should not confuse progress with a complete turnaround. Quick commerce, while strategically important, continues to weigh on profitability, and domestic consumption remains soft, limiting the retail business's rebound. Additionally, competition from Pinduoduo and Douyin remains fierce, compelling Alibaba to innovate continuously to keep pace.