HONG KONG / RankWire.AI / – Alibaba Group has announced its initial HK$80 billion share placement, aiming to boost expenditure on artificial intelligence and cloud technology. The Chinese tech giant plans to issue 710 million new ordinary shares at HK$112.70 each. Based on current exchange rates, the offering is valued at approximately US$10.2 billion. The company anticipates the deal to conclude on Aug. 26, subject to standard closing conditions. The funds raised are designated for strategic investments across its AI divisions.
Alibaba stated that all net proceeds from this issuance will support its comprehensive AI development. The allocated funds will facilitate expansion and enhancements in computing infrastructure that underpin both AI products and cloud services. As demand for computational capacity increases, Alibaba Cloud has become integral to the company’s technological framework. Additionally, the firm is increasing investments in models, data processing, and related infrastructure, with these efforts growing in tandem with rising revenue from AI-related offerings.
This placement targets non-U.S. investors outside the United States through offshore channels. The HK$112.70 issue price reflects an 8.4% discount compared to Alibaba’s HK$123 closing price on Friday. Following the announcement, Alibaba’s Hong Kong-listed shares experienced a sharp decline, dropping as much as 10% to HK$110.10 in early Monday trading. The company also maintains a New York listing via American depositary shares under the ticker BABA. The newly issued shares will enlarge the company’s equity base once the transaction is finalized.
Increased AI investment driven by rising cloud demand
Throughout recent quarters, Alibaba has ramped up capital expenditure to support expanding AI computing capacity. During the quarter ending June 30, capital spending reached RMB67.68 billion, roughly US$10 billion, marking a 75% increase from RMB38.68 billion in the same period last year. The company linked this surge to ongoing investments in AI infrastructure, heightened demand for computing power, and rising chip component prices. This increase coincided with another quarter of rapid growth in its cloud segment.
For the quarter, Alibaba reported revenue of RMB268.95 billion, approximately US$39.6 billion, representing a 9% rise from the previous year. Revenue from AI Cloud and Compute Services alone reached RMB48.44 billion, about US$7.1 billion, with this segment growing 45% annually during the same period. Revenue generated from AI-related products totaled RMB12.38 billion, achieving triple-digit year-on-year growth for the twelfth consecutive quarter. These figures highlight the robust activity within Alibaba’s AI and cloud divisions.
The funding round follows a three-year AI and cloud investment pledge
The HK$80 billion offering comes after Alibaba announced a major investment commitment in February 2025. The company revealed plans to spend at least RMB380 billion over three years on artificial intelligence and cloud infrastructure, surpassing its combined expenditure in those areas during the past decade. The proceeds from this share sale will provide additional capital specifically allocated to advancing Alibaba’s full-stack AI capabilities. As a result, the funds will supplement an ongoing investment program that predates this offering.
This increase in capital expenditure has coincided with lower quarterly profits and significant cash outflows. For the June quarter, Alibaba posted a net income of RMB10.44 billion, down 75% from the same period last year. Its free cash flow reflected a net outflow of RMB44.67 billion, largely due to increased investments in cloud infrastructure. The latest equity placement supplies fresh funding to support Alibaba’s established AI and cloud investment plans, with closing scheduled for Aug. 26 under the agreed terms.