<div id="readability-page-1"><p><strong>Alibaba Group </strong><span>(BABA<span> -0.62%</span>)</span> has been on a journey of transformation over the past two years as it prepares for the next growth phase. In this process, the Chinese e-commerce giant almost completely reshuffled its senior leadership team (including its CEO), doubled down on core businesses, and paid more attention to delivering shareholder value.</p> <p>While its turnaround work is ongoing, there are early indicators that this effort has begun to deliver positive outcomes. Let's dive in and take a closer look.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTkwNDUvbG9naXN0aWMtMi5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTkwNDUvbG9naXN0aWMtMi5qcGcmdz03MDA"/></p><p>Image source: Getty Images.</p> </div> <h2>The e-commerce business is back to healthy growth</h2> <p>Once the undisputed leader in the Chinese e-commerce industry, Alibaba seems to have lost its way in the last few years as younger peers like Pinduoduo and Douyin gradually expanded their market share at the expense of the incumbent.</p> <p>But since Eddie Wu took over as Alibaba's CEO, he has brought new focus to the company by doubling down on core aspects of the business -- customer delight and artificial intelligence (AI) -- while axing unrelated companies, such as offline supermarkets. For instance, early this year, the tech conglomerate disposed of its shares in Sun Art, a brick-and-mortar supermarket, to focus on its core e-commerce platform business.</p> <p>So far, these efforts have already brought positive results to the business. For example, the Chinese e-commerce business reported 12% growth in customer management revenue in the quarter ended March 31, an acceleration from the 9% growth reported in the quarter ended Dec. 31, 2024. Comparatively, the customer management revenue growth rate was just 4% in the fiscal year ended March 31, 2024. It is also worth mentioning that 88VIP, the highest-spending customer group, grew by double digits year over year to more than 50 million.</p> <p>Beyond its Chinese e-commerce business, Alibaba's international e-commerce business grew  22% for the latest reported quarter. This business is highly diversified in regions (Europe, Asia, and the Gulf Region) and platforms (Aliexpress, Trendyol, etc.), providing enormous growth opportunities in the coming years.</p>  <h2>The cloud computing business is picking up steam</h2> <p>Once dubbed the rising star within Alibaba Group, Alibaba Cloud experienced a difficult period in fiscal 2024, when revenue grew at just 3% amid weak demand and competition. It didn't help that Alibaba Cloud cancelled its planned initial public offering, further impacting investor sentiment.</p> <p>Fortunately, things have turned for the better lately, as the business is growing again, leveraging the AI trend. In the latest quarter, revenue surged 18% to 30 billion yuan, driven mainly by faster public cloud revenue growth. In particular, AI-related revenue sustained triple-digit growth, the seventh consecutive quarter of triple-digit growth rates.</p> <p>The solid improvements in AI-related revenue were across a wide range of verticals, such as the internet, retail, manufacturing, and media. In other words, businesses are increasingly adopting cloud computing and AI offerings to improve their operations, suggesting that the AI adoption trend could continue for the foreseeable future.</p> <p>Internally, Alibaba Cloud continues to invest in the latest technology to ensure that it remains a leading contender in the AI race. For instance, it launched the Qwen 3 model, &#34;a new generation of hybrid reasoning models that combine the capabilities of fast, simple responses and deeper chain-of-thought reasoning into a single model.&#34; This new model aims to deliver stronger performance at lower costs, making it highly appealing to enterprises and developers.</p> <p>Besides, Alibaba has committed to spending heavily on building the infrastructure needed to accommodate the expected increase in AI demand in the future, aiming to spend more than $50 billion in the next three years. In short, Alibaba Cloud is well-positioned to sustain its growth momentum in the coming years.</p> <h2>Alibaba is rewarding its shareholders</h2> <p>For the latest fiscal year, Alibaba repurchased $11.9 billion of its stock (5.1% of the outstanding shares) and approved the distribution of $4.6 billion of annual and special dividends, returning $16.5 billion in cash to shareholders. And that's after returning $16.5 billion to investors in fiscal 2024.</p> <p>Alibaba's ongoing efforts to reward its shareholders are essential to building trust, especially as it seeks to rebuild confidence following years of regulatory pressure, slowing growth, and leadership transitions. It will also help attract investors, especially those from the Western markets, to hold the stock for the long term.</p> <p>Moreover, returning cash to investors also signals that the tech giant is in good financial shape, so much so that it can invest in growth and reward shareholders simultaneously.</p> <h2>What does it mean for investors?</h2> <p>Alibaba's recent performance suggests that its turnaround efforts are gaining momentum and that the tech giant is much better positioned today than it was in the last few years. If it can sustain its growth momentum in the coming quarters, investors can be confident that the worst is over.</p> <p>All eyes are on for the next few quarters.</p>                                                                            </div>

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<p>Alibaba Group is undergoing a transformation, focusing on core businesses and shareholder value. Recent indicators show positive outcomes, including a 12% growth in customer management revenue and a 22% increase in international e-commerce. Alibaba Cloud is also rebounding with an 18% revenue surge, driven by AI adoption. The company repurchased $11.9 billion in stock and distributed $4.6 billion in dividends, signaling financial health. These developments suggest Alibaba's turnaround efforts are gaining momentum, positioning the company favorably for future growth and investor confidence.</p>

- Alibaba Group is undergoing a transformation, focusing on core businesses and enhancing shareholder value after leadership changes.  
- The e-commerce segment has shown a 12% growth in customer management revenue, while international e-commerce grew 22%, indicating a recovery in market position.  
- Alibaba Cloud is rebounding with an 18% revenue increase, driven by AI adoption, and the company is committed to significant investments to support future growth.

3 Signs That Alibaba's Turnaround Effort Is Bearing Fruit