(Reuters) -China's Alibaba ( BABA ) missed market estimates for quarterly revenue on Friday as the company's e-commerce business grapples with tough competition and choppy consumer demand, eclipsing gains in its cloud computing business.

U.S.-listed shares of the company fell 1.5% in premarket trading.

Consumer confidence in China has taken a beating from persistent weakness, with the economy weighed down by a lingering property sector crisis, weak wage growth and global trade disruptions.

Consumers remain cautious, even as e-commerce companies resorted to steep discounts and price cuts to drum up demand.

That eclipsed strong growth in Alibaba's ( BABA ) cloud segment, where revenue surged 26% to 33.40 billion yuan, accelerating from the 18% growth seen in the prior quarter. Analysts were expecting an 18.4% rise to 31.44 billion yuan, according to LSEG data.

Alibaba ( BABA ) has been among the most aggressive players in China's AI landscape, unveiling upgrades on an almost weekly basis, most recently rolling out a model that converts portrait photos into lifelike video avatars.

The company reported total revenue of 247.65 billion yuan ($34.62 billion) in the first quarter ended June, compared with an estimate of 252.92 billion yuan, according to data compiled by LSEG.

($1 = 7.1529 Chinese yuan renminbi)