Alibaba Launches Record $10.2 Billion Share Sale to Fund AI Expansion
Synopsis
China’s e-commerce and cloud giant has launched an HK$80 billion Hong Kong share placement to finance its “full stack” AI capabilities, making it the largest primary follow-on offering by a Hong Kong-listed company.
Alibaba has kicked off an HK$80 billion ($10.2 billion) share placement as it looks to raise more money for its artificial intelligence plans.
If completed, the deal would be the largest primary follow-on share sale ever by a Hong Kong-listed company. It would also rank as the third-largest primary follow-on share sale globally this year, behind offerings from Alphabet and Intel.
Alibaba said all of the proceeds will be used to strengthen its AI capabilities. The investment will cover areas such as chips, computing infrastructure and the development and use of AI models.
Shares Offered at a Discount
Alibaba is offering 710 million ordinary shares at HK$112.70 each. That represents a 3.6% discount to the company’s latest closing price. The company has not said how much of the money will be allocated to each part of its AI investment programme.
The offering has attracted strong interest from investors, including sovereign wealth funds. People familiar with the transaction said Alibaba increased the size of the deal after receiving more orders than the number of shares available.
Alibaba Steps Up AI Spending
Alibaba said last week that it had already used almost half of its three-year capital spending plan. Strong demand for its AI products and services will also help the company further predict the payback period returns from AI investments averaging around 2.5 years, down an additional year from three years earlier
However, the higher spending is putting pressure on profits. Alibaba’s net profit fell 75% in the April-to-June quarter as the company increased its investment in AI. Chief Executive Eddie Wu said the spending is necessary to build the computing capacity Alibaba needs to support its future growth.
US Investors Excluded
US investors cannot participate in the share placement because the offering was not registered under US securities laws as an offshore transaction. Morgan Stanley, HSBC, UBS and CICC are acting as joint bookrunners for the deal.
AI Spending Continues to Grow
The global market for artificial intelligence systems is booming which compels a perfect tech company to invest massively in semiconductors, data centres and infrastructure required to support new artificial intelligence systems.
In 2026, Microsoft, Amazon, Alphabet and Meta will probably devote some $725 billion to capital expenditure, much of it on data centres, chips and cloud infrastructure for AI.
Source: Reuters
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