Alibaba Plans $10.2 Billion Hong Kong Share Sale to Fund Global AI Expansion

Alibaba Plans $10.2 Billion Hong Kong Share Sale to Fund Global AI Expansion

Alibaba Group plans to raise HK$80 billion, about $10.2 billion, through a share placement in Hong Kong as the Chinese technology giant steps up investment in artificial intelligence.

The proposed fundraising, announced on Sunday, August 23, will direct 100% of the net proceeds toward Alibaba’s full-stack AI capabilities, including computing infrastructure, chips, and the development and deployment of AI models.

If completed, the transaction would become the largest-ever primary follow-on share offering by a Hong Kong-listed company and the world’s third-largest primary follow-on share sale of 2026, behind offerings from Alphabet and Intel

Alibaba Plans to Sell 710 Million Shares

Under the proposed placement, Alibaba plans to issue 710 million ordinary shares at HK$112.70 per share.

The placement price represents a 3.6% discount to Alibaba’s most recent closing share price before the announcement, according to a term sheet reviewed by Reuters.

The size of the fundraising reflects the scale of Alibaba’s ambitions in artificial intelligence, particularly as technology companies globally commit increasingly large amounts of capital to computing infrastructure.

Alibaba said the proceeds will be used entirely for AI investment rather than for general corporate purposes.

Where Alibaba will spend the $10.2 billion

Alibaba has not provided a detailed breakdown showing how much of the HK$80 billion will go to each area.

It has, however, said the money will support its full-stack AI capabilities.

That includes expanding and improving AI infrastructure, investing in chips, developing AI models, and deploying those models across its businesses.

The strategy gives Alibaba control across several layers of the AI ecosystem rather than relying solely on third-party technology.

For Alibaba, that means spending on the computing capacity needed to train and operate AI models is becoming a major part of its long-term growth strategy.

Alibaba’s AI Spending Is Already Reshaping Its Finances

The new fundraising comes just days after Alibaba reported a sharp decline in quarterly profit as it accelerated its AI investment.

For the April-to-June quarter, Alibaba’s net profit fell 75% year-on-year, while revenue increased 9%.

The company said its capital expenditure rose 75% to 67.68 billion yuan, driven largely by spending on AI infrastructure and higher chip procurement costs.

The contrast between rising revenue and falling profit highlights the financial cost of Alibaba’s AI strategy.

The company is spending heavily today in an attempt to build the computing capacity and AI services it expects to generate greater returns in the future.

Alibaba has committed 380 billion yuan to AI and cloud

Alibaba has previously announced a 380 billion yuan ($56.4 billion) investment plan covering AI and cloud infrastructure over a three-year period from 2026 to 2029.

By the end of June, the company had already spent roughly half of that planned investment.

Alibaba expects the payback period on its AI-related capital expenditure to fall to 2.5 years from three years, supported by a strong demand for AI services.

Chief Executive Eddie Wu has argued that Alibaba needs to build the necessary computing capacity now if it wants to capture future AI growth.

The latest share placement would provide the company with additional capital to continue that expansion without relying entirely on operating cash flow.

Strong Investor Demand Boosted the Share Sale

Investor demand for the proposed placement was strong, including interest from sovereign wealth funds, according to people familiar with the transaction cited by Reuters.

Alibaba increased the size of the offering after the deal was oversubscribed, according to those sources.

Morgan Stanley, HSBC, UBS, and CICC are acting as joint bookrunners for the transaction.

The strong demand is significant because Alibaba is asking investors to provide fresh capital at a time when the company is deliberately accepting lower near-term profitability in exchange for greater investment in AI.

Alibaba’s Cloud and AI Business Is Growing

The company’s AI investment is already producing stronger growth in its cloud business.

Alibaba reported that revenue from its cloud and AI-related services increased 45% year-on-year to 48.44 billion yuan in the April-to-June quarter.

That growth provides part of the justification for Alibaba’s continued investment.

The company’s strategy is built around the expectation that demand for AI computing, cloud services, and AI models will continue to expand as businesses adopt artificial intelligence.

The challenge is converting that demand into sustainable profits after spending billions of dollars on the infrastructure required to support it.

Why Alibaba Is Raising Money Through Shares

A share placement gives Alibaba access to fresh capital without adding another large debt obligation to its balance sheet.

The trade-off is dilution.

When a company issues new shares, existing shareholders own a smaller percentage of the company unless they participate in the new issuance.

For Alibaba, the decision reflects the scale of the capital required for its AI strategy.

The company could continue funding investment from its existing resources, but raising additional equity gives it more financial capacity to accelerate spending while maintaining flexibility.

The Share Sale Is Part of a Global AI Investment Race

Alibaba’s fundraising comes as technology companies around the world are committing enormous amounts of capital to AI infrastructure.

The major US cloud companies—Microsoft, Amazon, Alphabet, and Meta—are expected to spend approximately $725 billion in capital expenditure during 2026, with a substantial portion directed toward AI data centres, chips and cloud infrastructure.

Alibaba’s decision shows that the competition for AI infrastructure is not limited to US technology companies.

Chinese technology groups are also investing heavily in computing capacity, semiconductor technology, cloud platforms, and AI models.

What the Alibaba Share Sale Means for Investors

For investors, the key issue is whether Alibaba can eventually generate enough revenue and profit from AI to justify the scale of its spending.

The company’s latest results show the immediate cost.

Net profit dropped 75% while capital expenditure jumped 75%. At the same time, AI and cloud revenue grew strongly.

That creates a clear investment question: Can the company’s AI revenue growth eventually outpace the cost of building and operating the infrastructure behind it?

If demand continues rising and Alibaba improves the economics of its AI and cloud businesses, the investment could strengthen its long-term competitive position.

If returns take longer than expected, however, the company could face continued pressure on profitability and cash flow.

US Investors Are Excluded From the Placement

Alibaba said the placement is being conducted as an offshore transaction and has not been registered under US securities laws.

As a result, US investors are not eligible to participate in the offering.

The restriction does not prevent Alibaba’s US-listed shares from continuing to trade, but it does mean the new Hong Kong placement is being directed toward eligible investors outside the United States.

Alibaba’s AI Expansion Is Becoming a Major Capital Story

The proposed HK$80 billion ($10.2 billion) fundraising is more than a conventional share sale.

It is a major financial commitment to Alibaba’s belief that AI will become one of the company’s most important sources of future growth.

The company is already spending heavily on computing infrastructure, chips, and AI models, while its cloud and AI businesses are growing rapidly.

But the scale of the investment also raises the stakes.

Alibaba now needs to demonstrate that the billions being committed to AI can eventually translate into stronger recurring revenue, improved margins, and sustainable returns for shareholders.

For investors, the next stage of the story will be less about how much Alibaba is spending on AI and more about how quickly that spending begins generating measurable financial returns.

Sources: Reuters | Alibaba Group Holding Limited | Financial Times