Alibaba, Tencent Fall Short of Expectations for Big AI Payoff

China’s twin leaders in artificial intelligence reported revenue that fell short of estimates, signaling the challenges in translating higher spending on AI into faster growth.

Alibaba Group Holding Ltd.‘s revenue grew a less-than-projected 3% the March quarter, even as it posted its first operating loss since the depths of the Covid pandemic in early 2021 because of the cash it’s funneling into AI initiatives. Tencent Holdings Ltd. reported its slowest pace of revenue growth in over a year, though it outpaced its arch-foe thanks to a resilient advertising and gaming business.

The twin reports reflect how China’s biggest tech ...