Alibaba Group launched a HK$80 billion ($10.2 billion) share placement on Sunday to fund its artificial intelligence operations. The Chinese e-commerce and cloud computing company stated that the entirety of the net proceeds will be directed toward "full stack" AI capabilities. This development includes investments in semiconductor chips, infrastructure, and the creation of AI models.
The move follows a global trend of high capital expenditures in the technology sector. According to market data, this transaction represents the largest-ever primary follow-on offering for a company listed in Hong Kong. It also stands as the third-largest primary follow-on share sale globally this year, trailing only similar offerings from Alphabet and Intel.
Alibaba disclosed in a term sheet that it intended to sell 710 million ordinary shares at a price of HK$112.70 per share. This price reflects a 3.6% discount relative to the stock's most recent closing price. Sources familiar with the deal reported that Alibaba increased the size of the offering due to high investor demand, including interest from sovereign wealth funds. The company noted that U.S. investors were ineligible for the placement as it was not registered under U.S. securities laws.
The company recently reported its financial results for the April-to-June quarter, which showed a 75% decrease in net profit compared to the previous year. Alibaba attributed this decline to increased spending on AI-related capital expenditures. CEO Eddie Wu stated during an earnings call that the company must build necessary compute capacity to capture future growth. Alibaba also noted that surging demand has accelerated its expected payback period for these investments from three years to 2.5 years.
On a broader scale, the $10.2 billion influx of capital marks a shift in how one of China's largest technology firms allocates resources toward hardware and infrastructure. This spending mirrors a global pattern among technology "hyperscalers." Four major U.S. firms—Microsoft, Amazon, Alphabet, and Meta—are expected to spend a combined $725 billion on capital expenditures in 2026. Alibaba's investment targets the "full stack" of AI, meaning the funds will flow into the supply chains for specialized chips and data center construction.
The immediate impact will be observed in Alibaba’s financial reporting and project timelines. The company has already utilized nearly half of its three-year capital expenditure plan. As these funds are deployed into infrastructure, the company anticipates a return on investment within 30 months (2.5 years) rather than the previously estimated 36 months. Future policy and market stability may be affected by how this investment influences Alibaba's competitive position in cloud computing and AI model deployment against both domestic and international rivals. Morgan Stanley, HSBC, UBS, and CICC are acting as joint bookrunners for the deal. No specific date for the finalization of the share delivery was reported.