Ant Group Reports 91% Profit Decline Amid AI Investment Surge

Ant Group, the fintech giant behind Alipay, has experienced a staggering 91% drop in its quarterly profit, falling to approximately 1.2 billion yuan (around $57 million) for the quarter ending September 30. This dramatic decline is attributed to the company's significant investments in artificial intelligence across various sectors, including healthcare and payment services.

The company's research and development spending surged to 23.45 billion yuan in 2024, a 10.7% increase from the previous year, primarily directed towards enhancing AI capabilities. This includes the AI-powered healthcare application AQ, which has gained over 100 million users since its launch in June 2025, and AI Pay features within Alipay, which have also surpassed the same user milestone.

Despite these advancements, Ant Group's financial outlook remains bleak, with profits projected to decline by approximately 79% in the following quarter. The company has been operating under stringent regulatory scrutiny since its halted IPO in late 2020, which adds further complexity to its financial situation.

New Developments in Alibaba's AI Business

• Alibaba's annualized AI-related product revenue has reached approximately RMB 35.8 billion (around $5.2 billion).
• The Cloud Intelligence Group experienced a 45% year-over-year revenue growth in the June quarter, driven by AI-related products.
• AI-related products have achieved triple-digit year-over-year growth for twelve consecutive quarters.
• Annual recurring revenue for AI model and application services is projected to exceed RMB 10 billion (approximately $1.4 billion) in the June quarter, with expectations to triple to RMB 30 billion (around $4.3 billion) by year-end.
• AI-related products currently represent about 30% of external cloud revenue, with projections to surpass 50% within a year.
• Capital expenditures increased by 75% in one quarter to around RMB 67.7 billion (about $10 billion), primarily for AI infrastructure and compute capacity.
• CEO Eddie Wu has prioritized AI commercialization, establishing the Alibaba Token Hub (ATH) Business Group focused on Model-as-a-Service (MaaS).
• China's AI market is rapidly expanding, with domestic companies increasingly relying on local cloud providers like Alibaba for AI compute due to restrictions on advanced US chips.