<p><span>Chinese e-commerce company </span><strong>Alibaba</strong><span> <span class="ticker-mention inline-flex items-center font-bold">(BABA <span class="ml-1 text-green-900">+6.43%</span>)</span> posted a mixed earnings report for the fourth quarter of fiscal 2026. In a pre-market release today, Alibaba reported strong revenue growth, driven by a 40% jump in artificial intelligence-related cloud revenue.</span></p>
<p><span>But at the same time, the company badly missed analysts' earnings expectations, as net income of 86 million yuan ($12 million) was down from nearly 30 billion yuan a year ago, and it posted its first operating loss since 2021. </span><span>Earnings of $0.19 per share were far below analysts' consensus expectations of $0.84 per share, or the $1.84 per share that it posted a year ago.</span></p>
<p><span>The good news for Alibaba is that investors appear willing to shake off the loss and focus on Alibaba's growing cloud revenue. The stock was up 7% in morning trading. </span>However, I don't expect that <strong>Amazon</strong> <span class="ticker-mention inline-flex items-center font-bold">(AMZN <span class="ml-1 text-green-900">+0.94%</span>)</span> would get the same treatment if it posts similar results in its next earnings report.</p>
<div><img alt="Company logos for Amazon and Alibaba" width="880" height="587" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Njk3NTQvNmFjOGZjZWE2MTUyMDQ0ZGIwMzY5NzU3OTQ4NDQ5ODc1ZDRjYjlkMS5wbmcmdz0zODQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Njk3NTQvNmFjOGZjZWE2MTUyMDQ0ZGIwMzY5NzU3OTQ4NDQ5ODc1ZDRjYjlkMS5wbmcmdz0zODQw"/>
<p>Image source: The Motley Fool.</p>
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<h2>Amazon gets treated differently than Alibaba</h2>
<p><span>Amazon and Alibaba have a lot in common. Both are e-commerce companies, headquartered in the U.S. and China, respectively. And both have fast-growing cloud computing segments with significant growth potential as companies and developers increasingly turn to cloud environments to design, train, and run AI programs.</span></p><div><div id="foolcom_sidebar_top_container"></div></div>
<p><span>Last year, Alibaba announced plans to invest $55.9 billion over three years to improve its AI infrastructure and cloud computing capabilities.</span><span>The market celebrated, with Alibaba stock jumping 34% the month that management made that announcement.</span><span></span></p><div></div>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Alibaba Group Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0JBQkEucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0JBQkEucG5nJnc9MTI4"/></div><div><h2>NYSE: BABA</h2><div>Alibaba Group</div></div></div><div><div><div>Today's Change</div><div>(6.43%) $8.67</div><div>Current Price</div><div>$143.45</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div>$323B</div><div>Day's Range</div><div>$130.33 - $146.00</div><div>52wk Range</div><div>$103.71 - $192.67</div><div>Volume</div><div>1.5M</div><div>Avg Vol</div><div>11M</div><div>Gross Margin</div><div>40.43%</div><div>Dividend Yield</div><div>0.78%</div></div></div></div></section>
<p><span>Amazon, meanwhile, had spent $131.8 billion on AI infrastructure in 2025. But when it announced plans to increase that to $200 billion this year, the market roiled. Amazon's stock fell 12% that month, and headlines were all about whether Amazon was spending too much, too fast, and if it would be able to see a return on its investment.</span></p><div><div id="in_line_article_pitch_container"></div></div>
<p><span>Amazon's spending on AI is already cutting into its free cash flow -- spending an additional $70 billion on AI this year will likely push its free cash flow into the negative. Amazon reported in its first-quarter results that trailing 12-month free cash flow dropped to $1.2 billion, down from $25.9 billion a year ago.</span><span></span></p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Amazon Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0FNWk4ucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0FNWk4ucG5nJnc9MTI4"/></div><div><h2>NASDAQ: AMZN</h2><div>Amazon</div></div></div><div><div><div>Today's Change</div><div>(0.94%) $2.51</div><div>Current Price</div><div>$268.33</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div>$2.9T</div><div>Day's Range</div><div>$263.22 - $269.36</div><div>52wk Range</div><div>$196.00 - $278.56</div><div>Volume</div><div>773K</div><div>Avg Vol</div><div>48M</div><div>Gross Margin</div><div>50.60%</div></div></div></div></section>
<h2>Amazon's increasing reliance on AWS</h2>
<p><span>It's difficult to overstate how important Amazon's cloud computing division -- Amazon Web Services (AWS) -- is to the company. Amazon got $143.93 billion in revenue from its e-commerce sales, up from $126.40 billion a year ago. That's a solid increase of 13.9%. But at the same time, operating expenses for that segment were $134.24 billion, meaning that the Amazon.com division is generating a profit margin of only 6.7%.</span></p>
<p><span>Meanwhile, AWS's revenue of $37.58 billion was up 28.4% year over year, and its profit margin was 37.7%. In short, AWS accounted for most of Amazon's profits for the quarter and is growing much faster than e-commerce.</span></p>
<p><span>Amazon signed an agreement with </span><strong>Meta Platforms</strong><span> to deploy tens of millions of its AWS Graviton cores to support Meta's agentic AI, and signed agreements with OpenAI and Anthropic for a combined 7 gigawatts of computing capacity through its Trainium chips. Overall, Amazon has an annual revenue run rate of more than $20 billion for its AI chips.</span></p>
<p><span>Amazon stock is only up 1% since its April 29 earnings report, and it has plenty of time before it reports Q2 earnings sometime in late July. While I think that Amazon's spending on AI is justified -- and important to the future of the company -- I won't be surprised in the least if Amazon's aggressive spending unnerves investors yet again.</span></p><div id="article_pitch_container"></div><div id="promobox_container"></div>

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<p>Alibaba's mixed earnings report for Q4 FY2026 shows strong cloud revenue growth but a significant earnings miss, with net income dropping to 86 million yuan from nearly 30 billion a year ago. Despite this, Alibaba's stock rose 7%. In contrast, Amazon's heavy investment in AI has raised concerns, leading to a 12% stock drop when it announced plans to increase AI spending to $200 billion. Amazon's AWS remains crucial, generating significant profits, but its e-commerce segment struggles with low margins. Investors may react differently to Amazon's upcoming earnings report compared to Alibaba's.</p>

- Alibaba reported mixed earnings for Q4 fiscal 2026, with strong revenue growth from AI-related cloud services but a significant miss on net income and earnings per share expectations.  
- In contrast, while both Alibaba and Amazon invest heavily in AI infrastructure, Amazon faces investor skepticism due to its larger spending and declining cash flow, leading to a difference in market response to earnings reports.  
- Amazon's AWS continues to drive significant revenue and profits, yet the growing reliance on this segment raises concerns about its sustainability amidst increasing operating expenses.

Why Alibaba's Earnings Report May Spell Trouble for Amazon