JD.com Inc (NYSE: JD) reported a second-quarter financial result for the period ending June 30, 2026, that showed an inverse relationship between revenue and profit on August 13.

Revenue declined 2.9% year-over-year to 346.4 billion yuan, while operating profit swung from a loss to a gain of 4.5 billion yuan. Adjusted net profit increased by 20% to 8.9 billion yuan.

In the same quarter of the previous year, the company was heavily investing in meal delivery subsidies and marketing to secure orders and users. One year later, with subsidies reduced and losses from new ventures narrowing, profits have returned to the balance sheet. However, a double-digit decline in home appliances and digital goods revenue indicates that growth pressure persists.

During the earnings call, JD.com CEO Sandy Xu characterized this as a "clear inflection point" in the profit trajectory, while CFO Shan Su attributed the improvement to high-margin revenue streams like core retail gross profit and advertising commissions, as well as reduced losses from the meal delivery business.

Nevertheless, this appears more like an inflection point for profit recovery than for growth. Retail revenue and operating profit at JD.com are still declining. While meal delivery losses narrowed significantly year-over-year, the sequential improvement from the first quarter was relatively modest. Furthermore, management did not provide explicit revenue guidance for the second half of the year.

A more notable development is the change in how JD.com is allocating its capital. In the second quarter, marketing expenses decreased by approximately 6.7 billion yuan year-over-year. Conversely, fulfillment and research and development (R&D) expenses combined increased by about 4.3 billion yuan, with R&D spending seeing a near 40% jump.

The company is transitioning from purchasing traffic to building out instant fulfillment and AI capabilities. The key determinant of its future growth quality will be whether its investments in AI and supply chain can connect traffic, efficiency, and service revenue into a new, self-sustaining growth loop.

Growth Pressure Shifts Back to Core Retail After Meal Delivery Losses Narrow

The decline in JD.com's second-quarter revenue was primarily driven by weakness in its traditional stronghold categories.

Revenue from electronic products and home appliances dropped 11.8% year-over-year, dragging down overall merchandise revenue by 5.4%. This was partly due to a high comparison base from the same period in 2025, when the trade-in policy spurred a surge in sales. Entering 2026, a combination of subsidy timing, the high base effect, and price increases on some electronic products dampened sales volume.

On the earnings call, management characterized this as a temporary pressure rather than a loss of competitiveness in these categories. However, it is noteworthy that JD.com did not provide a forecast for recovery in home appliance and digital goods revenue for the second half, nor did it offer group-level revenue growth guidance.

This suggests that while the impact of the high base will gradually diminish, a return to positive revenue growth depends on consumer demand, not just financial base effects.

The segments that helped offset the pressure from home appliances and digital goods were general merchandise and its platform business.

Second-quarter revenue from general merchandise grew 5.6%, and service revenue increased 6.8%, with platform and advertising service revenue rising 8.3%. Service revenue's share of total group revenue increased from approximately 20.8% in the same period last year to 22.9%.

This is altering JD.com's profit structure. First-party merchandise sales incur costs for procurement, inventory, warehousing, and delivery. In contrast, advertising and commissions do not require inventory and typically carry higher gross margins. Gross profit in the second quarter rose 4.7% year-over-year to approximately 59.3 billion yuan, with the gross margin expanding from 15.9% to 17.1%.

CFO Shan Su emphasized during the call that the strong performance of platform and marketing service revenue relative to the overall business was a key reason for the improvement in JD.com Retail's profit margin. JD.com Retail's second-quarter revenue fell 4.7% to 295.4 billion yuan, and operating profit decreased 3.3% to 13.5 billion yuan. However, its operating profit margin rose from 4.5% to 4.6%, the highest level ever recorded for a major promotional season.

It is important to distinguish between a "record-high profit margin" and "profit growth." The actual profit scale of JD.com Retail is still declining, but the decline in profit is smaller than the decline in revenue. Therefore, the 4.6% margin reflects the core business's ability to maintain profitability under revenue pressure, not that the retail business has entered a period of rapid profit expansion.

The larger source of group-level profit improvement was the reduction in losses from new ventures, including meal delivery.

In the second quarter, the operating loss from new ventures narrowed to 9.9 billion yuan from 14.8 billion yuan in the same period last year, a reduction of approximately 4.9 billion yuan. During the same period, JD.com's group operating profit improved by about 5.4 billion yuan, meaning the narrowed loss from new ventures contributed roughly 90% of the total improvement.

Management attributed the improved performance of new ventures primarily to enhanced operational efficiency in meal delivery, increased revenue sources, and optimized marketing spending. They also stated that investments in other ventures like Jingxi and Joybuy remained on track.

However, while the loss from new ventures narrowed significantly compared to the second quarter of 2025, it only decreased by about 500 million yuan compared to the roughly 10.4 billion yuan loss in the first quarter of 2026. This suggests that while meal delivery has passed its most aggressive investment phase, the pace of loss reduction has not accelerated significantly.

Another factor to consider is a business reclassification. In late October 2025, JD.com Logistics acquired the instant delivery business previously under new ventures. Starting from 2026, some delivery revenue was reclassified from new ventures to JD.com Logistics. Consequently, the 47.6% year-over-year decline in new venture revenue to 7.3 billion yuan cannot be directly interpreted as a drop in meal delivery order volume.

The change in expense structure provides a clearer picture of JD.com's strategic choices. In the second quarter, marketing expenses fell by approximately 6.7 billion yuan, a 24.8% decline. Meanwhile, fulfillment expenses increased by about 2.3 billion yuan, or 10.4%. JD.com is cutting back on front-end customer acquisition costs like subsidies and promotions, but it continues to invest in riders, delivery networks, and instant retail infrastructure.

This indicates that the next phase of the meal delivery business will be less about who offers larger subsidies and more about who can retain users, improve delivery density, and generate revenue from merchant commissions, advertising, and cross-selling at lower subsidy levels.

However, JD.com did not disclose key metrics for its meal delivery business during the call, such as order volume, loss per order, commission rates, advertising revenue, or user retention. Thus, it remains uncertain whether the meal delivery model is close to achieving commercial viability.

AI Enters the Expense Sheet but Not Yet the Independent Revenue Sheet

While the core task for meal delivery is to reduce losses, AI is tasked with a different objective: finding new sources of efficiency and growth for JD.com.

In the second quarter, JD.com's R&D expenses reached 7.3 billion yuan, a 37.7% year-over-year increase. The R&D expense ratio rose from 1.5% to 2.1%. Simultaneously, marketing expenses fell by 24.8%. Looking at these expense lines together, the company's resource allocation is clear: marketing expenses decreased by about 6.7 billion yuan, while fulfillment expenses increased by about 2.3 billion yuan and R&D expenses increased by about 2.0 billion yuan.

This does not mean every yuan saved on promotions was directly invested in AI, but it confirms that the company's spending focus is shifting from traffic acquisition to fulfillment and technology.

On the earnings call, management discussed AI primarily within the context of retail and supply chain efficiency. Key areas of AI implementation highlighted include consumer-facing terminals, advertising recommendations, customer service, procurement, logistics, healthcare, and industrial supply chains.

On the consumer front, the JoyInside platform has integrated with nearly 200 brands, and the cumulative installed base of connected devices has more than tripled since the "Double 11" shopping festival in 2025. The initiative aims to embed JD.com's voice interaction, product knowledge, and transaction services into AI toys, robots, and smart hardware.

For JD.com, if consumers can complete product inquiries, after-sales service, and even place orders through smart devices, these devices could become new transaction gateways beyond the JD.com app.

CEO Sandy Xu stated on the call that as of the "618" shopping festival this year, JD.com JoyInside had partnered with nearly 200 brands, and the cumulative number of connected devices had more than tripled compared to the 2025 "Double 11" period.

In the healthcare sector, during the "618" period, the number of users served by JD.com Health's AI doctor "Dawei" was nearly four times that of the same period last year. In the industrial sector, JD.com Industrial deployed over 70 AI agents in the first half of the year, covering procurement planning, sourcing, fulfillment, and after-sales. On the logistics side, thousands of autonomous delivery vehicles are now operating routinely in over 20 provinces.

These examples demonstrate that JD.com does not lack AI use cases. However, they do not yet prove that AI has become an independent growth driver.

In this earnings report, JD.com did not separately disclose revenue from AI products. Furthermore, the efficiency improvements attributed to AI have not yet created a consistent signal in the financial metrics.

In the second quarter, JD.com Logistics' revenue grew 24.3%, and operating profit rose 15.6%, but its operating profit margin declined from 3.8% to 3.5%. JD.com's inventory turnover days also increased to 40.5 days from 34.1 days in the same period last year. This suggests that while automation and algorithms may be improving efficiency in specific areas, they have not fully offset the costs of business expansion, inventory, and fulfillment investments.

This highlights the unique aspect of JD.com's AI strategy: the use cases are concrete, but their financial impact is not yet visible in the earnings report.

Companies like Alibaba and Tencent can explain AI commercialization through cloud revenue, model API call volumes, and capital expenditure. JD.com's AI value is more likely to be dispersed across metrics like advertising conversion rates, procurement costs, inventory turnover, fulfillment costs, and customer service efficiency.

The advantage is that the use cases are real; if efficiency gains materialize, they can directly impact billions of dollars in transaction volume. The disadvantage is that the effects are difficult to verify, and management may attribute overall efficiency improvements to technology investments.

Therefore, to assess whether JD.com's AI initiatives are effective, investors should monitor three sets of indicators: whether platform advertising and commission revenue can consistently outpace merchandise revenue; whether inventory and fulfillment efficiency improve with AI penetration; and whether AI products begin to disclose metrics like paying customers, revenue, and renewal rates.

Based on this earnings report and call, JD.com has achieved profit recovery, but it has not yet formed a complete growth loop. The meal delivery business has demonstrated the company can reduce losses, the platform business shows it can lighten its revenue structure, and AI proves its willingness to invest. What remains to be proven is whether these three elements can collectively generate new revenue growth, rather than just making a declining-revenue report look more profitable.