Alibaba Seeks $10 Billion in Record Hong Kong Share Sale to Fund AI Push — BigGo Finance

Alibaba Group Holding (BABA) is tapping equity markets for roughly $10 billion, launching the largest-ever primary follow-on share sale by a Hong Kong-listed company as the Chinese technology giant accelerates its push into artificial intelligence.

The company is offering 710 million ordinary shares at HK$112.70 each, a 3.6 percent discount to Friday’s close, according to Bloomberg. Alibaba said it will channel 100 percent of net proceeds into full-stack AI capabilities, spanning chips, infrastructure, and the development and deployment of AI models.

The deal ranks as the third-largest primary follow-on globally this year, trailing only Alphabet’s $80 billion raise in June and Intel’s $15 billion sale in August. Alibaba will face a 90-day lockup on the new shares.

Reuters, citing two people familiar with the deal, reported that the offering has drawn strong investor interest, including from sovereign wealth funds. Demand exceeded the initial sale size, prompting Alibaba to increase the offering. Morgan Stanley, HSBC, UBS, and CICC are acting as joint bookrunners.

The capital raise arrives as Alibaba’s aggressive AI buildout increasingly strains its financials. Quarterly capital spending has climbed to nearly $10 billion, while June-quarter net profit plunged 75 percent to 10.5 billion yuan ($1.6 billion). Free cash outflow reached $6.6 billion during the period.

Despite the near-term pressure, Alibaba has signaled confidence in the returns. The company has already spent nearly half of its three-year capital expenditure plan, but expects the payback period for AI investments to shorten from three years to 2.5 years, citing surging demand.

Revenue climbed 9 percent to 269 billion yuan in the quarter, underscoring the strategic repositioning under Chief Executive Eddie Wu. While the traditional e-commerce core softened, the cloud and AI segment accelerated growth to 45 percent. AI-related product revenue has now grown in the triple-digit percentage range for twelve consecutive quarters.

“We delivered a strong quarter, driven by the improved commercialization of our comprehensive AI capabilities,” Wu said. He positioned Alibaba to benefit from what he described as substantial growth in AI demand.

Wu has also been pruning non-core assets to fund the pivot. Alibaba recently sold its gaming arm Lingxi Games to Trustar Capital in a deal reportedly worth at least $1.5 billion.

Meanwhile, the company’s flagship Qwen model family became the world’s most popular lineup this year, according to Bloomberg. Whether $10 billion in fresh capital can maintain that lead over well-funded US rivals is now the question investors are likely pricing in.

The Numbers Behind the Raise

Note: Figures compiled from company disclosures and media reports.

Strategic Context

The fundraising underscores the intensity of the global AI infrastructure race. Alibaba’s move follows similar large-scale capital raises by US technology peers, as companies across the sector scramble to secure compute capacity and model development resources.

For Alibaba, the equity raise provides a buffer against the cash burn associated with data center construction and chip procurement while preserving flexibility for further strategic divestments. The strong investor demand, including from sovereign funds, suggests appetite for exposure to China’s AI infrastructure buildout remains robust despite geopolitical tensions.

The transaction also marks a milestone for Hong Kong’s equity capital markets, which have struggled with subdued listing activity in recent years. A successful deal of this magnitude could signal renewed confidence in the city’s ability to host large-scale technology capital raises.