Alibaba Slashes Workforce by a Third Amid AI Pivot and Divestitures
Alibaba’s workforce experienced a significant contraction of approximately 34% throughout 2025, as the e-commerce and technology titan strategically divested certain offline retail operations while intensifying its focus on artificial intelligence. The company concluded December with a headcount of 128,197 employees, a notable decrease from the 194,320 recorded a year prior.
This latest workforce disclosure emerged alongside an earnings report released Thursday, which also revealed a substantial 67% plunge in the firm’s profit and revenue figures that fell short of expectations for the final quarter of last year. In response, Alibaba’s shares in Hong Kong saw a decline of 6% on Friday.
The substantial reduction in personnel was largely attributed to the sale of the Sun Art retail group at the close of 2024, and a simultaneous divestment of its stake in the Intime department store chain around the same period. These moves underscore a broader strategic realignment by Alibaba, China’s second-largest tech company by market capitalization, which joins a growing list of major technology firms that have undertaken workforce reductions in the past year.
Historically, Alibaba’s expansive workforce has been instrumental in supporting its diverse business units, encompassing e-commerce, cloud computing, logistics, and a spectrum of related services. However, the company has been progressively streamlining its headcount in recent years. The most recent cuts represent a more aggressive scaling back compared to the 11% reduction observed in December 2024 from the preceding year.
This strategic retrenchment is intrinsically linked to Alibaba’s efforts to divest labor-intensive assets and fundamentally restructure its core businesses, with artificial intelligence emerging as a paramount strategic imperative. The company harbors ambitions to evolve into a comprehensive, full-stack AI enterprise, with capabilities spanning from semiconductor manufacturing to advanced computing and the development of cutting-edge AI models.
Earlier this week, Alibaba unveiled “Wukong,” an agentic AI service designed for enterprise applications. Concurrently, the company has implemented price increases for its cloud and storage services, some by as much as 34%, citing escalating demand and heightened supply chain costs.
During an earnings call on Thursday, Alibaba CEO Eddie Wu articulated an ambitious target, stating the company aims to generate over $100 billion in annual revenue from its cloud and AI segments within the next five years. This aggressive growth projection signals Alibaba’s unwavering commitment to leveraging AI as a primary engine for future expansion and profitability. The strategic reallocation of resources, away from less profitable traditional retail and towards high-growth AI ventures, represents a critical juncture for the tech giant as it navigates a rapidly evolving global technology landscape.
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