Alibaba Group reported fiscal first-quarter 2027 results with net income falling 75% to RMB 10.44 billion ($1.6 billion) as heavy spending on artificial intelligence and cloud computing pressured profitability. Revenue rose 9% to 268.95 billion yuan ($40 billion), beating estimates, with cloud revenue climbing 45% on strong AI demand. AI-related products accounted for 35% of Alibaba Cloud's external revenue, while quarterly AI-related revenue reached RMB 12.4 billion ($1.84 billion), implying an annualized run rate of RMB 49.5 billion ($7.34 billion) after a 12th consecutive quarter of triple-digit growth. The release coincided with a strategic reorganization consolidating core operations into three main segments—Alibaba E-Commerce Group, AI Cloud and Computing Services, and AI Lab and Applications. Capital expenditure jumped 75% to 67.7 billion yuan, pushing free cash flow to a $6.6 billion outflow. U.S.-listed shares fell as much as 5% before paring the drop to roughly 3.5%. CEO Eddie Wu cited improving commercialization of the full-stack AI push as the key driver of cloud growth.