Alibaba is raising $10.2 billion through a major Hong Kong share placement and says all net proceeds will be used to strengthen its AI capabilities, including infrastructure.
The company is placing 710 million new shares at around $14.38 each, representing around 3.6% of its enlarged share capital.
The offering is the largest primary follow-on share sale ever by a Hong Kong-listed company and one of the biggest globally this year.
The fundraising comes just days after Alibaba reported a 75% year-on-year drop in quarterly net profit, as spending on AI infrastructure surged.
Capital expenditure jumped 75% to approximately $10.1 billion during the April-June quarter as Alibaba expanded computing capacity and invested in AI infrastructure.
However, the spending is also driving growth.
Revenue from Alibaba’s cloud and AI business rose 45% to around $7.2 billion during the quarter, while its AI model services business has reached more than $2.38 billion in annual recurring revenue.
Alibaba CEO Eddie Wu said the company needs to build sufficient computing capacity first to capture future AI growth.
Alibaba previously committed approximately $56.5 billion to cloud and AI infrastructure over three years and has already spent roughly half of that amount.
The company has also indicated that its total investment could eventually exceed the original target.
Alibaba is increasingly using its own AI chips in data centres as well, which could help reduce costs and improve margins as deployment expands.
Its AI infrastructure push is also extending beyond China. Alibaba Cloud opened two availability zones in Paris in June, giving it a third major European cloud hub after Germany and the UK.
Alibaba shares fell around 8% in Hong Kong following the announcement, as investors reacted to the dilution from the new share sale and the scale of the company’s AI spending.
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