Chinese technology giant Alibaba (BABA) has reported an 84% decline in its profit despite continued growth of its artificial intelligence (A.I.) and cloud computing businesses.
Management blamed the profit drop on heavy investments in new technologies and e-commerce initiatives.
Alibaba reported earnings of 5.1 billion Chinese yuan ($750.9 million U.S.), an 84% year-over-year decrease.
Management said the company continues to invest heavily in semiconductors for A.I. as well as data centers for cloud computing.
While cloud has been a positive for Alibaba, analysts and investors continue to struggle with the company’s investments in e-commerce.
Alibaba has been developing an expensive new online shopping service that allows users to receive deliveries in under an hour.
Alibaba’s China e-commerce group reported a 40% year-over-year profit decline in the first quarter on the back of these investments.
However, Alibaba’s investments appear to be paying off in its cloud computing unit, which posted a 38% year-over-year rise to 41.6 billion yuan in the year’s first quarter.
Alibaba said A.I.-related revenue came in at nine billion yuan in Q1. Alibaba has positioned itself as one of China’s leading A.I. players, developing chips and selling its cloud computing services.
The company recently announced that it is launching a new A.I. shopping assistant for its main e-commerce platform in China.
BABA stock has declined 11% this year to trade at $134.78 U.S. per share in New York.
