Alibaba’s ambitious AI spending is already reshaping its finances, while investor demand for the planned Hong Kong offering appears stronger than expected.
China’s Alibaba plans to raise HK$80 billion, or about US$10.2 billion, through a share placement in Hong Kong. The company will use the proceeds to advance artificial intelligence technologies.
If completed, the deal will become the largest primary follow-on share offering among companies listed in Hong Kong. Globally, it will be the third-largest primary share sale this year, following deals by Alphabet and Intel.
Alibaba to invest in AI, chips, and infrastructure
Alibaba said it plans to use all net proceeds from the offering to develop the full artificial intelligence technology stack. This includes chips, computing infrastructure, the development of AI models, and their deployment.
The company intends to sell 710 million ordinary shares at HK$112.70 per share. This price is approximately 3.6% below Alibaba’s latest closing share price before the deal was announced.
Alibaba did not disclose a detailed breakdown of future investments across individual artificial intelligence segments.
AI spending rises amid strong demand
Last week, Alibaba reported financial results for the quarter from April to June. The company said it had already spent nearly half of the funds allocated under its three-year capital investment plan.
Alibaba also expects the payback period for its artificial intelligence investments to decrease from three years to 2.5 years. The company attributes this to rapidly growing demand for AI solutions.
Alibaba’s net profit in April-June fell 75% year over year due to the aggressive expansion of capital expenditures related to artificial intelligence.
To be able to benefit from future growth, we first need to make these capital investments to build the necessary computing capacity.
– Eddie Wu
Demand for Alibaba shares exceeds supply
Alibaba’s share placement attracted significant interest from investors, including sovereign wealth funds. Because demand exceeded supply, the company increased the size of the deal.
Morgan Stanley, HSBC, UBS, and CICC acted as joint bookrunners.
Alibaba clarified that the offering is being conducted as an offshore transaction and has not been registered under U.S. securities laws. As a result, U.S. investors cannot participate in the deal.
Global technology companies increase AI spending
The global artificial intelligence boom since 2022 has significantly increased investment in data centers, computing infrastructure, and semiconductors in both China and the United States.
The four largest U.S. cloud companies are expected to spend approximately US$725 billion on capital expenditures in 2026. A significant portion of these funds will be tied to the development of AI data centers, chip production, and cloud infrastructure.
- Microsoft;
- Amazon;
- Alphabet;
- Meta.
Alibaba’s planned offering demonstrates that competition for computing resources and artificial intelligence technologies is increasingly shaping the investment strategies of the world’s largest technology companies.