On Thursday, Alibaba Group Holding Limited (NYSE:BABA) missed estimates with its June quarter results. Since getting behind the CEO helm, Eddie Wu has been focused on getting Alibaba's core China e-commerce business back on its stable feet, but the cautious Chinese consumer and increased competition from JD.com Inc (NASDAQ:JD) and PDD Holdings Inc (NASDAQ:PDD)-owned Temu made his task even harder.

Fiscal First Quarter Highlights

For the quarter ended on June 30th, Alibaba reported that revenue rose only 4% to 243 billion yuan which is about $34 billion. Its long-time e-commerce rival, JD.com reported even smaller YoY revenue growth rate of 1.2%.

Alibaba's revenue growth is owed only to its international expansion that managed to offset the fall of core domestic business on Tmall and Taobao platforms. While Alibaba's China e-commerce business contracted 1% YoY to 113.37 billion yuan, overseas online shopping businesses that include Aliexpress grew 32% YoY.

But fueled by AI-products, the cloud business went up 6% YoY to 26.5 billion yuan, which is the fastest growth rate since 2022's June quarter. In addition, adjusted EBITA of the segment surged 155% YoY. Alibaba reaffirmed that the segment remains on track to reach double-digit growth in the second half of the 2025 fiscal year.

But overall net income tanked 29% YoY to 24.27 billion yuan due to a lowered income from operations and "increase in impairment" related to the company's investments.

Once the e-commerce king is now struggling with weakened demand.

2023 was a tumultious year in which Alibaba carried out its biggest ever corporate structure overhaul. It has been working on reigniting growth but PDD is posing a big threat with Temu, and then there's the faltering domestic economy as the world's second largest economy remains sluggish. Owning Pinduoduo in China and Temu in the U.S., PDD has been growing at a stellar rate. With a low price strategy, PDD is growing at an expense of both Alibaba and its longtime foe, JD.com. Although only time will tell if this strategy is sustainable once the pinch of lower prices kicks in, PDD has threatened Alibaba's crown in quite a short time. In addition, Alibaba's international segment is still not profitable and it could be a long time before it turns into a profit driver.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.