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Alibaba Group's ( BABA ) US-traded shares were down around 3% in Friday morning trading after the Chinese ecommerce giant posted higher-than-expected quarterly earnings on the back of cloud operations growth fueled by artificial intelligence (AI) but revenue was lower than expected.

The company said that net income in its September quarter soared 63% to 43.5 billion Chinese yuan ($6.02 billion) year-over-year, comfortably beating the 26.8 billion yuan expected by analysts polled by Visible Alpha.

“Growth in our cloud business accelerated from prior quarters, with revenues from public cloud products growing in double digits and AI-related product revenue delivering triple-digit growth,” Chief Executive Officer Eddie Wu said.

"We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth," he added.

Quarterly Revenue Lags Forecasts

Revenue of 236.5 billion yuan, up 5% higher year-over-year, undershot the 239 billion yuan analysts’ estimate.

Alibaba’s New York-listed shares are up about 14% this year and are currently a bit under $90 each, driven higher by investor hopes that Beijing’s planned stimulus for its slowing economy will revive consumer spending in China. Spending appetite has been hit by the country’s prolonged real estate slump in recent years.

The shares, however, are still well off an all-time high of almost $319 in November 2020 before Beijing began a crackdown on large tech firms and sidelined founder Jack Ma.