Alibaba's Chinese commerce business has experienced its first decline due to weak consumer spending, with the company reporting a 27% drop in profit, casting doubt on a potential turnaround. CEO Eddie Wu is leading a major overhaul, focusing on Alibaba's core commerce and cloud computing while investing in artificial intelligence, including a $1 billion funding round for the AI startup Moonshot. Despite internal AI-driven improvements, such as increasing e-commerce orders by 30%, Alibaba faces challenges with profitability and competition. The broader economic context includes reduced consumer spending and increased deposits in wealth management products, as households prioritize debt repayment and saving over spending.