Analysts said the early success of the company's redesigned Qwen app positions it as a potential competitor to Chinese rival DeepSeek and OpenAI's ChatGPT.

Alibaba said on Tuesday revenue in the three months ending September 30 totalled 247.8 billion yuan ($35 billion).

That was a five percent jump on the 236.5 billion yuan logged in the same quarter last year and beat analyst estimates of 245.2 billion yuan.

"We have entered into an investment phase to build long-term strategic value in AI technologies and infrastructure," said Eddie Wu, Alibaba's chief executive officer.

"Robust AI demand further accelerated our Cloud Intelligence Group business, with revenue up 34 percent and AI-related product revenue achieving triple-digit year-over-year growth for the ninth consecutive quarter," Wu said.

Net income attributable to ordinary shareholders for the quarter fell to 21 billion yuan, down 52 percent on-year, the company said.

Alibaba runs some of China's biggest online shopping platforms and wants to become a major player in the global race to develop AI technology.

The Hangzhou-based company said in February it would spend at least 380 billion yuan ($53 billion) on artificial intelligence and cloud computing over the next three years.

Wu said in September the company plans to increase that spending further.

This approach has seen Alibaba's share price on Wall Street surge around 90 percent from this time a year ago -- despite fears that AI-related stocks are overvalued worldwide and could crash.

Its US shares closed five percent higher on Monday after the company said the Qwen app had surpassed 10 million downloads within the first week of its beta launch.

Crystal Li and Tommy Wong of China Merchants Securities said last week that Qwen's launch was "supported by Alibaba's prolonged investment and cutting-edge capabilities in foundational models" for artificial intelligence.

It could pave the way for the adoption of AI agents -- programmes that use chatbots to do the work humans do online, such as buying a plane ticket or adding events to a calendar.

"Compared to ChatGPT's direct access to third-party apps, we believe Alibaba's self-developed comprehensive product ecosystem and free-to-use policy provide competitive advantages for Qwen app," Li and Wong wrote.

Emily Jarvie of Proactive Investors also noted ahead of Tuesday's earnings release that "China is a key market for Qwen, as OpenAI's ChatGPT is not available".

"Its rapid adoption makes it one of the fastest-growing AI apps in China," Jarvie said.

Alibaba has also been in the headlines recently for other reasons, namely geopolitical tensions between China and the United States.

The Financial Times reported this month that Alibaba "provides tech support for Chinese military 'operations' against (US) targets", according to a White House memo provided to the newspaper.

The memo claimed that Alibaba hands customer data, including "IP addresses, WiFi information and payment records", to Chinese authorities and the People's Liberation Army, the report said.

An Alibaba Group spokesperson told AFP "the assertions and innuendos in the article are completely false".