Alibaba Group (BABA) Q3 FY26 earnings call: guidance and Q&A

How will ATH change the collaboration between cloud and AI businesses, and what are the key priorities (market share, revenue, model capabilities, consumer traction) for cloud and AI?

ATH aims for tight integration of models with applications in the agentic AI era. The top priority is enhancing model capabilities, which requires concerted efforts across the entire model pipeline, application, and infrastructure, leveraging the data flywheel effect from user adoption.

“our top priority is definitely to enhance model capabilities. However, to enhance model capabilities requires concerted efforts across the entire model pipeline as well on the application and infrastructure side in order to achieve sustained improvements over the long term.”

asked by Robin Zhu · answered by Yongming Wu

Given the slowdown in CMR growth in the December quarter due to macro pressures, what are the expectations for CMR trends in the March quarter and observed improvements in consumer sentiment?

The December quarter was challenged by weak macro, warm winter, late CNY, and increased consumer benefit investments. For the March quarter, improving consumer sentiment and quick commerce momentum have led to a significant recovery in physical goods GMV and CMR, with EBITA expected to improve accordingly.

“Going into the March quarter with the improving consumer sentiment that we've observed and momentum from our Quick Commerce strategy, our physical goods GMV and CMR trend have significantly recovered from the December quarter, and EBITA is expected to improve accordingly.”

asked by Joyce Ju · answered by Yongming Wu

What are the priorities for quick commerce (market share vs. unit economics), and how do its synergies with traditional e-commerce translate into better CMR growth?

Alibaba will continue to improve unit economics (UE) through fulfillment efficiency, monetization, and order mix optimization, while growing market share. Quick commerce significantly increased AACs by 150 million in 2025, including 100 million conventional e-commerce AACs, which will serve as a new growth engine as their ARPU and purchase frequency increase.

“Our AAC number increased 150 million in 2025 including 100 million conventional e-commerce physical goods AAC, which is more than the previous 3 years combined.”

asked by Gary Yu · answered by Yongming Wu

Can management provide information on T-Head's potential spin-off/IPO, operating metrics (reconciling 470k chips to revenue), expected growth, external customer usage, and comparison to domestic chips?

T-Head is a top-tier domestic AI chip provider, covering the entire AI workflow. Over 60% of its 470,000 shipped chips serve external commercial customers for both training and inferencing. Annual revenue reached RMB 10 billion. The unit ensures supply chain resilience and cost-effectiveness. An IPO is possible in the future, but there is no definitive timeline.

“At T-Head, over the past 2 years, we've successfully commercialized and launched chips with total volume exceeding 470,000 units with annual revenue reaching the RMB 10 billion level.”

asked by Alicia Yap · answered by Yongming Wu

Provide more details on the >$100 billion AI and cloud revenue target for the next 5 years, including growth drivers, and when to expect sustained improvement in Alibaba Cloud's margins.

The target is driven by MaaS, enterprise-level internal inference/training, and CPU-centric cloud computing supporting AI agents. Cloud profitability will become increasingly visible and improve, but not linearly, with potential for scale effect breakthroughs. The shift in IT budgets to operational/R&D costs for token consumption is a fundamental driver.

“I believe that the largest drivers of growth will come from three areas. First is the MaaS-driven business, which really is the core growth engine... Secondly, for AI and cloud computing, there's another very important growth opportunity... Third, there's another important driver, an important opportunity that I think tends to get ignored a lot of the time. And I'm talking about CPU-centric cloud computing...”

asked by Yuan Liao · answered by Yongming Wu

Is the 3-year e-commerce investment cycle being adjusted due to new opportunities in Instant Commerce and agentic commerce, and what is the overall direction for e-commerce?

Alibaba is making significant investments in the Quick Commerce business for the next two years to surpass RMB 1 trillion in sales, expecting positive economic returns for the overall e-commerce business within two years. AI will also have a significant impact on e-commerce, driving new experiences for consumers and merchants and upgrading business models.

“we will continue to invest heavily over the next two years in order to achieve our goal of surpassing RMB 1 trillion in quick commerce sales. We also believe that in two years' time, our investments in quick commerce will generate positive economic returns for our E-commerce business as a whole.”

asked by Alex Yao · answered by Yongming Wu