Alibaba Group Holding Ltd. disclosed Thursday that its global headcount fell sharply to 128,197 employees as of December 31, 2025, a 34% reduction from 194,320 a year earlier.
The development underlines aggressive divestitures of labor-intensive offline retail businesses and a strategic pivot toward artificial intelligence as the company’s primary growth engine.
The headcount drop, one of the largest percentage declines among major global tech firms in recent years, was driven primarily by the 2024 sale of Sun Art Retail Group (a hypermarket chain) at the end of the year and the earlier exit from its stake in department store operator Intime. Those transactions removed tens of thousands of employees from Alibaba’s consolidated numbers and marked the culmination of a multi-year effort to streamline non-core, capital-heavy retail operations.
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Alibaba’s latest quarterly earnings report, covering the December 2025 quarter, showed revenue slightly missing analyst expectations while net profit plunged 67% year-over-year, underscoring the financial strain from restructuring costs, competitive pressures in core e-commerce, and heavy investment in cloud and AI infrastructure. Shares in Hong Kong fell 6% on Friday, reflecting investor disappointment with the profit decline and cautious near-term outlook.
Alibaba CEO Eddie Wu used the earnings call to reiterate the company’s ambition to evolve into a full-stack AI enterprise, spanning semiconductor design and manufacturing, cloud computing infrastructure, foundational models, and agentic AI applications. Wu set an explicit target of growing combined cloud and AI revenue to more than $100 billion annually within five years, a roughly fourfold increase from current levels, positioning the unit as the principal driver of future profitability.
This week, Alibaba launched Wukong, an agentic AI service tailored for businesses that enables autonomous, multi-step task execution across enterprise workflows. The company also announced price increases of up to 34% for certain cloud and storage services, citing rising demand and higher supply-chain costs for advanced compute resources.
The workforce reduction aligns with this pivot. By offloading asset-heavy retail operations, Alibaba has freed up capital and management bandwidth to fund massive AI R&D and infrastructure build-out, including domestic GPU alternatives, large-scale model training, and agentic platforms. The company has also aggressively recruited AI talent in recent quarters, offsetting some of the broader headcount decline.
Alibaba’s 34% staff reduction in 2025 is among the most dramatic of any major global tech company over the past year. It follows a pattern seen across the sector, from Silicon Valley to Hangzhou, where firms have shed jobs to improve efficiency, refocus on core growth areas (particularly AI), and respond to slower revenue growth and margin pressure.
The cuts were far larger than the 11% reduction reported for December 2024 compared with the prior year, indicating acceleration in 2025 as divestitures closed and AI investment ramped up. Alibaba’s remaining workforce continues to support its dominant e-commerce platforms (Taobao, Tmall), cloud business (Alibaba Cloud), logistics arm (Cainiao), and emerging AI initiatives.
Alibaba’s Hong Kong-listed shares declined 6% on Friday, extending year-to-date losses amid investor caution over the profit plunge, ongoing competitive intensity in e-commerce, and uncertainty surrounding the pace of AI monetization. The sharp workforce reduction was viewed as both a positive signal of cost discipline and a reminder of the challenges in transitioning from a consumer-internet giant to an AI-first enterprise.
Analysts noted that while the headcount drop improves operating leverage in the near term, the success of Alibaba’s AI strategy, including Wukong, cloud price adjustments, and semiconductor efforts, will be critical to reversing margin compression and driving sustainable growth.
Alibaba’s 2025 results and workforce disclosure mean the company is shedding legacy retail assets to fuel an all-in bet on AI across the stack. The company is positioning itself as a full-spectrum AI player, from chips to models to agentic applications, in direct competition with global leaders like Microsoft, Google, Amazon, and domestic rivals including Tencent and Baidu.
Some analysts have described the $100 billion cloud-and-AI revenue target over five years as one of the most ambitious growth projections in global tech. However, they warn that execution will depend on scaling compute capacity amid U.S. export restrictions, achieving rapid enterprise adoption of agentic tools like Wukong, and maintaining pricing power in a competitive cloud market.