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Alibaba Cloud, the cloud computing subsidiary of Alibaba, unveiled its ChatGPT-style product Tongyi Qianwen at the Alibaba Cloud Summit 2023 on Tuesday morning.
Bloomberg | Bloomberg | Getty Images
Ali Baba Shares weakened as the Chinese e-commerce giant posted revenue below expectations in the first quarterly earnings report since its split into six units.
The company’s shares were down 1.4% in premarket trading in the United States at 12:15 p.m. London time.
Here’s how Alibaba fared in the quarter, which ended March 31, 2022, compared to Refinitiv consensus estimates:
- Income: 208.2 billion Chinese yuan ($29.6 billion) vs. 210.2 billion yuan expected, up 2% year-on-year;
- Non-GAAP diluted earnings per share: 1.34 yuan vs. 2.08 yuan expected, up 35% YoY
This is the first full quarter in which Alibaba’s figures reflect China’s reopening, after the country abruptly ended its strict Covid controls such as lockdowns and travel restrictions in December.
The year got off to a sluggish start, with overall online sales of physical goods remaining weak, bosses of major e-commerce platforms suggested in February.
Retail sales in China rose 18.4% in April, according to recent economic data. China’s economy grew 4.5% in the first quarter, hitting the fastest pace in a year. This performance was expected to boost Alibaba’s sales.
The company operates two of the largest online shopping sites in China: Taobao and Tmall. Despite increased competition, Alibaba’s results remain an important indicator of the world’s second-largest economy.
China generates nearly 50% of online shopping transactions worldwide.
Thursday’s profit figures are the first since Alibaba announced a substantial overhaul of its organization, splitting the company into several separate units in a development that several analysts interpreted as signaling an easing of Beijing’s crackdown on businesses. technologies.
The new company structure is divided into six divisions: Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group and Digital Media and Entertainment Group.
Meanwhile, China’s regulatory tightening on technology over the past two years has begun to ease, as Beijing’s enforcement of the rules becomes more predictable.
Some investors are betting on a strong recovery from Chinese tech giants. On Tuesday, Michael Burry of The Big Short fame stepped up his bets on Chinese e-commerce companies Alibaba and JD.comdoubling its stake in Alibaba to $10.2 billion and its stake in JD.com to $11 million.
Investors were on the lookout for any comments from Alibaba on artificial intelligence. The company has been working on its own ChatGPT-style product, called Tongyi Qianwen.
On Wednesday, Tencent Chairman Martin Lau said the company had “made good progress” in building core models, the systems that underpin AI chatbots like ChatGPT, after the company announced a solid rebound in revenue.