Alibaba's workforce decreased by approximately 34% in 2025, falling from 194,320 employees at the end of 2024 to 128,197 by December 2025, as the company divested several offline retail businesses and intensified its focus on artificial intelligence initiatives [1]. The bulk of these reductions occurred in the March 2025 quarter, following the sale of Sun Art retail group at the end of 2024 and the exit from its stake in department store chain Intime [1]. This move is part of a broader trend among major tech firms, both in China and globally, to reduce headcounts in response to shifting business priorities [1].
Alibaba's latest earnings report, released Thursday, revealed a 67% plunge in profit and revenue that missed expectations for the last three months of 2025 [1]. In response, the company's shares in Hong Kong dropped by 6% on Friday [1]. The workforce reduction was significantly larger than the 11% decrease reported in December 2024, underscoring the scale of Alibaba's restructuring efforts [1].
The company is restructuring its core businesses to prioritize artificial intelligence, aiming to become a full-stack AI enterprise encompassing semiconductor manufacturing, computing, and AI models [1]. This week, Alibaba launched an agentic AI service called Wukong for businesses and increased prices for its cloud and storage services by up to 34%, citing rising demand and supply chain costs [1].
During the earnings call, CEO Eddie Wu stated that Alibaba's goal is to grow its cloud and AI revenue to over $100 billion annually within the next five years [1].
CONCLUSION
Alibaba's aggressive workforce reduction and divestment of retail assets signal a decisive pivot toward AI and cloud services. Despite short-term profit and revenue setbacks, the company is positioning itself for long-term growth in the AI sector, as evidenced by new product launches and ambitious revenue targets. The market reacted negatively to the earnings report, with shares falling 6%.