China's Alibaba on Thursday posted a 75% fall in profits for the June quarter as AI spending weighed on the tech giant's results.

Capital expenditure was up 75% to 67.7 billion Chinese yuan ($10 billion), primarily driven by uneven timing of customer purchases, an increase in CPU-compute capacity and higher prices across a broad range of chip components, the company said.

Meanwhile, revenue rose 9% to 268.95 billion Chinese yuan, slightly higher than an LSEG estimate of 268.88 billion yuan.

As the AI race accelerates, companies across the sector are increasingly contending with rising expenses for computing power and hardware. In March, the company reportedly said it was raising prices for its AI computing and storage products by as much as 34% amid surging demand.

Alibaba's U.S. listed shares were down 4.6% shortly after the market opened.