China’s Alibaba missed market estimates for quarterly revenue on Friday as the company’s e-commerce business grapples with tough competition and choppy consumer demand, eclipsing gains in its cloud computing business.
U.S.-listed shares of the company fell 1.5% in premarket trading.
Consumer confidence in China has taken a beating from persistent weakness, with the economy weighed down by a lingering property sector crisis, weak wage growth and global trade disruptions.
Consumers remain cautious, even as e-commerce companies resorted to steep discounts and price cuts to drum up demand.
That eclipsed strong growth in Alibaba‘s cloud segment, where revenue surged 26% to 33.40 billion yuan, accelerating from the 18% growth seen in the prior quarter. Analysts were expecting an 18.4% rise to 31.44 billion yuan, according to LSEG data.
Alibaba has been among the most aggressive players in China’s AI landscape, unveiling upgrades on an almost weekly basis, most recently rolling out a model that converts portrait photos into lifelike video avatars.
The company reported total revenue of 247.65 billion yuan ($34.62 billion) in the first quarter ended June, compared with an estimate of 252.92 billion yuan, according to data compiled by LSEG.
Reuters
