The e-commerce and cloud computing giant is selling HKUSD 80 billion (USD 10.2 billion) of new shares at HKUSD 112.70 each, an 8.4% discount to Friday’s (August 21) close, to fund chips, AI infrastructure, and models.
While Alibaba’s main operational domain, e-commerce, is witnessing growth stagnation, AI has emerged as the group’s biggest driver of revenue growth. The company’s Qwen AI models have become some of the most popular tools in China.
Still, a section of Alibaba’s investors have reservations about how successful it will be.
“Alibaba’s DNA is in e-commerce, not advanced tech. No matter how much it invests in AI hardware, it will likely be outmaneuvered by competitors in tech innovation,” said Yang Tingwu, vice general manager of asset manager Tongheng Investment, while interacting with Reuters.
The sale of 710 million ordinary shares is equivalent to 3.6% of the enlarged total shares outstanding. It drew strong demand, attracting USD 28 billion of orders, including USD 6 billion from long-only and sovereign investors, reports said.
About 40% of the book will reportedly go to long-only and sovereign investors, including major sovereign wealth funds in Europe, Asia, and the Middle East.
Investors taking part in the activity included the Qatar Investment Authority (QIA), Norway’s Norges wealth fund, and Hillhouse.
Alibaba chairman Joe Tsai himself bought 720,000 Hong Kong shares at an average price of HKUSD 112 apiece, for about HKUSD 80 million in aggregate, while Eddie Wu, the group’s chief executive, bought 350,000 Hong Kong shares at an average price of HKUSD 111.6 per share, totalling HKUSD 40 million, stated the Group’s stock exchange disclosures.
With the United States and China engaging in the tech supremacy race, investment in AI and related infrastructure such as data centers has reached monumental heights in the top two global economies.
However, China’s so-called AI giants are investing only a fraction of what their American counterparts are spending on the technology.
Most of the global-level fundraising is happening via heavy debt issuance, a trend that has begun to test the limits of investor demand.
Japan’s SoftBank, in its biggest debt offering to date, would issue USD 6.3 billion in bonds to retail investors.
Alibaba’s stock sale has also ended up creating records by becoming the largest-ever follow-on offering of new shares by a Hong Kong-listed company and the third-largest globally in 2026 after offerings of nearly USD 85 billion from Google parent Alphabet and USD 20 billion from Intel.
Capital Group, one of the world’s largest active investment managers, estimates that AI-related capital expenditure by the biggest US hyperscalers, Microsoft, Amazon, Alphabet, Meta, and Oracle, reached USD 791 billion as of July 31, dwarfing the combined USD 118 billion mark registered by China’s ByteDance, Alibaba, Tencent, and Baidu.
Analysts suggest that one reason for the disparity is the subdued Chinese spending, which is attributed to the lack of access to Nvidia’s most advanced AI chips because of Washington’s export controls. That in turn has pushed Chinese firms to develop more efficient AI models and infrastructure that require less computing power and capital.
Coming back to Alibaba, the Group’s share placement comes a week after the venture reported a quarterly net profit that tumbled 75% from a year earlier, primarily due to AI-related spending.
Alibaba in 2026 separated its AI operations from its cloud business, with CEO Eddie Wu heading the new unit.
In addition to positioning itself as a key AI partner for companies operating in China, the venture is preparing a listing of its chipmaking arm, T-Head, apart from developing AI agents linking services across its sprawling ecosystem, including shopping, food delivery, travel, and entertainment.
Separately, Alibaba has helped train a large language model that Apple will reportedly sell in the Chinese market.
The Group has committed nearly half of its three-year capital expenditure plan of 380 billion yuan (USD 56.5 billion), apart from ensuring that the moves come with a “high certainty” of returns.