Alibaba’s Fiscal 2026 Earnings Preview:

Alibaba's Fiscal 2026 Earnings Preview: What to Watch for Its AI-Driven Transformation

 

As Alibaba gears up to release its full-year fiscal 2026 earnings report in about two months, all eyes are on the tech giant's pivotal AI transformation under CEO Wu Yongming. This marks his third full-year report since taking the helm and the first comprehensive look at whether Alibaba's two-year-old "User First, AI-Driven" strategy has delivered tangible results, turning strategic rhetoric into real business momentum. From conversations with e-commerce operators, cloud technology experts, and AI entrepreneurs, it is clear that Alibaba's AI initiatives are touching every corner of its ecosystem—yet perceptions vary widely, from practical business empowerment to tool-level upgrades and ecological expansion through open-source models. This earnings report will be the ultimate litmus test for the depth and sustainability of its overhaul.

 

At the core of Alibaba's turnaround is embedding AI into the company's fundamental operational logic, moving far beyond just launching a flagship large language model like Tongyi Qianwen. When Wu Yongming took office, Alibaba was in a period of adjustment, with stalled spin-off plans and siloed collaboration across business units, leading to fragmented AI efforts. The CEO prioritized AI as the core long-term strategy, reshaping organizational structures and performance metrics to align every business unit's key KPIs with AI-driven growth. Resource allocation has followed suit: Alibaba announced over 380 billion yuan in investment for cloud and AI infrastructure over three years in 2025, surpassing its total spending in the sector over the past decade. In the past four quarters alone, its capital expenditure on AI and cloud infrastructure hit 120 billion yuan, with management hinting the initial investment plan was conservative and ready to scale further amid market shortages. Wu also outlined a clear three-stage roadmap to super artificial intelligence—intelligent emergence, autonomous action, and self-iteration—signaling Alibaba's AI push is not a short-term trend-chase but a long-term rebuild of its commercial foundations.

 

Alibaba Cloud and Tongyi Qianwen have emerged as the unshakable core of its B2B AI commercialization, with a well-established competitive moat. Cloud services serve as the perfect commercial vehicle for large models, as enterprise customers demand not just API calls but computing power, data security, industry solutions, and operation services—all strengths of Alibaba Cloud, the long-time leader in China's public cloud market. The financial payoff is already visible: Alibaba Cloud's quarterly revenue surged 34% year-over-year to 39.824 billion yuan, a record growth rate, with AI-related revenue posting triple-digit year-over-year growth for nine consecutive quarters. Tongyi Qianwen's open-source strategy has been a game-changer, with over 300 open-source models, 600 million global downloads, and 170,000 derivative models by December 2025, surpassing Meta's Llama series to rank first globally. This open-source ecosystem drives cloud adoption, as developers and startups naturally choose Alibaba Cloud to deploy their models. Industry data shows Tongyi Qianwen's share of China's enterprise-level large model daily calls jumped to 32.1% in late 2025, nearly doubling from six months earlier, with clients spanning finance, manufacturing, retail, and government—creating a far more diversified client base than competitors focused on the internet sector alone.

 

Alibaba's e-commerce core, the backbone of its business, is also undergoing a thorough AI-powered revamp that goes beyond superficial tool replacement. Under the Taotian Group, AI tools now cover the entire merchant operation chain, from product creation, marketing placement, and customer service to supply chain optimization and user operations. Alibaba Mother's Wanxiangtai AI Wujie, a super intelligent operating agent for merchants, delivered double-digit year-on-year ROI growth across scenarios during the 2025 Double 11 festival, helping brands in over 10 segments double their transactions. While top brands fully leverage these AI tools to drive efficiency and growth, small and medium merchants face barriers such as limited free features and costs for premium functions, a gap Taotian needs to address to ensure the entire merchant ecosystem benefits from AI. For Alibaba, the success of e-commerce AI transformation hinges on improving matching efficiency of users, products, and scenarios, and delivering tangible value to both large brands and small sellers.

 

On the consumer front, Qianwen App represents Alibaba's high-stakes bet on a C端 AI super入口, but it faces critical tests post-subsidy frenzy. Rebranded and upgraded in November 2025, the app integrates Taobao, Alipay, Amap, Fliggy, and other core ecosystem apps, offering more than 400 AI-powered one-stop service functions. Alibaba's 3 billion yuan "Treat Program" during the 2026 Spring Festival catapulted Qianwen App to global prominence: it ranked third among global AI apps by MAU at 2.0269 billion, with a staggering 552.83% growth rate, and nearly 200 million AI orders during the event. However, the market now focuses on user retention after subsidies end, as many users downloaded the app for discounts rather than genuine AI needs. A deeper challenge remains user stickiness: consumers already have streamlined paths to access services via dedicated apps, making it hard to convince them to take an extra step to use Qianwen App for daily tasks.

 

Alibaba's AI journey is not without tangible challenges, and the upcoming earnings report must address these headwounds. Compared to ByteDance's rapid rise in AI, Alibaba's battle is a long-term one that hinges on technological accumulation, ecological construction, scenario implementation, and sustained investment. While Alibaba has correctly embedded AI into its B2B, B2C, cloud, and e-commerce businesses to form a closed loop, critical questions linger: when will massive infrastructure investments translate into stable returns? How can Qianwen App unlock real user value beyond subsidies? How will it outpace competitors in cloud and e-commerce? And how will it achieve self-control of underlying core technologies? For a veteran internet giant built on commercial infrastructure, Alibaba's AI transformation is ultimately about rebuilding that infrastructure to create new value for merchants, enterprises, and consumers. The fiscal 2026 earnings report will not just be a set of financial numbers—it will reveal whether Alibaba has reclaimed its rhythm in the AI era.