HONG KONG / RankWire.AI / – Alibaba Group has set the price for a HK$80 billion share placement, aiming to boost spending on artificial intelligence and cloud infrastructure development. The Chinese tech giant will issue 710 million new ordinary shares at HK$112.70 each. Based on current exchange rates, the offering is valued at approximately US$10.2 billion. Alibaba anticipates completing the transaction by Aug. 26, pending standard closing conditions. The company intends to allocate the proceeds toward investments in its AI initiatives.
Alibaba has confirmed that all net proceeds from the offering will be used to strengthen its comprehensive artificial intelligence capabilities. This planned expenditure includes expanding and upgrading its computing infrastructure to better support AI products and cloud services. As demand for processing capacity rises, Alibaba Cloud has become integral to the firm’s technology operations. Additionally, the company has increased its investments in models, data processing, and related infrastructure, reflecting revenue growth from AI-related products and services.
The placement targets non-U.S. investors outside the United States via offshore channels. The issue price of HK$112.70 represents an 8.4% discount compared to Alibaba’s HK$123 closing price on Friday. Following the announcement, Alibaba’s Hong Kong-listed shares experienced a sharp decline, falling as much as 10% to HK$110.10 during early Monday trading. The company also maintains a New York listing through American depositary shares under the BABA ticker. The issuance of new shares will increase the company’s equity base once the process concludes.
Increasing AI Investment Driven by Growing Cloud Demand
Alibaba’s capital expenditure has already risen as it scales up computing capacity for artificial intelligence. During the quarter ending June 30, capital spending hit RMB67.68 billion, approximately US$10 billion. This amount marked a 75% rise from RMB38.68 billion in the same period last year. The surge was attributed to ongoing investments in AI infrastructure, heightened computing demand, and increasing chip component costs. These investments coincided with another quarter of rapid expansion within Alibaba’s cloud operations.
Alibaba reported quarterly revenue of RMB268.95 billion, roughly US$39.6 billion, representing a 9% increase year-over-year. Revenue from AI Cloud and Compute Services reached RMB48.44 billion, or about US$7.1 billion, growing by 45% annually. Revenue from AI-related products hit RMB12.38 billion, experiencing triple-digit growth for the 12th consecutive quarter. These figures highlight the substantial activity across Alibaba’s AI and cloud segments.
Funding Initiative Supports Long-Term AI and Cloud Projects
This HK$80 billion share placement follows an investment commitment announced by Alibaba in February 2025. The company stated it plans to invest at least RMB380 billion over three years in artificial intelligence and cloud infrastructure. This planned expenditure surpasses its combined spending in these areas over the previous decade. The current share issuance supplies additional capital allocated specifically for Alibaba’s comprehensive AI development efforts. The funds will therefore support an ongoing investment program, which predates this offering.
The rise in capital expenditure has been accompanied by decreased quarterly profit and significant cash outflows. Alibaba reported a net income of RMB10.44 billion for the June quarter, down 75% from the same period last year. Free cash flow showed a net outflow of RMB44.67 billion, largely due to increased investment in cloud infrastructure. The recent equity offering provides fresh funding to continue Alibaba’s previously announced AI and cloud development plans. The transaction is scheduled to close on Aug. 26, in accordance with the stated terms.