Alibaba Sells More Shares to Raise $10.2B to Spend on AI

Chinese tech giant Alibaba has accelerated its push into AI, raising about $10.2 billion to spend on AI with newly issued shares.The move was confirmed in a statement issued by the company on Sunday, which said it wanted to extend its “global AI leadership.”“Alibaba intends to use 100% of the net proceeds from the equity placement to invest in its full-stack AI capabilities, including to expand and enhance its AI infrastructure,” according to the statement.The money will come in the form of 710 million new shares issued at $14.38 each, representing an 8.4% discount to the closing price of $15.70 two days earlier. The new shares are equivalent to about 3.7% of Alibaba’s previously issued capital.Market watchers said the transaction was the largest-ever secondary offering on the Hong Kong exchange, while Bloomberg reported it was the exchange’s largest share sale of any kind since 2021, when tech investment company Prosus sold $14.7 billion of stock in Tencent, another Chinese tech giant. Demand for Alibaba stock was reported to be more than three times the offering size.Related:Thomson Reuters’ New Model Could Inspire Other SaaS VendorsThe sale was limited to non-U.S. investors -- no surprise given Alibaba’s ongoing regulatory problems in America. In June, it was named on a Department of Defense blacklist that alleged links with the Chinese military, and it is now suing the U.S. government over its inclusion.The capital will certainly come in useful for Alibaba, given its ambitions. In February last year, it revealed plans to invest $53 billion through 2027 on AI infrastructure and cloud computing.Just last week, though, the company reported a 75% year-over-year drop in quarterly net income to US$1.5 billion, accompanied by an increase in capital expenditure attributed to the escalating cost of AI infrastructure.These figures come against the backdrop of the company’s most recent Qwen 3.8 Max AI model receiving praise for its capabilities -- as well as its affordability. That perceived affordability, while a strong selling point, also poses a hurdle, as it limits how much Alibaba can raise prices to offset ever-rising development costs.As trading opened in Hong Kong on Monday morning, the initial response to the secondary offer was negative, with share prices dropping by up to 10%.Bloomberg subsequently reported that as prices plunged, Alibaba’s top two executives bought about $15.3 million worth of stock between them, with Alibaba Group chairman Joseph Tsai acquiring $10.3 million and CEO Eddie Wu, $5 million.Beyond its commitment to build infrastructure, the company has not provided specific details on exactly how it will spend the capital it raised.Related:Waymo Develops Its Own Chip for Self-DrivingAbout the AuthorContributing WriterGraham Hope has worked in automotive journalism in the U.K. for 26 years, including spells as editor of leading consumer news website and weekly Auto Express and respected buying guide CarBuyer.