HONG KONG / RankWire.AI / – Alibaba Group has announced an HK$80 billion share issuance aimed at funding its growth in artificial intelligence and cloud infrastructure. The Chinese tech giant will distribute 710 million new ordinary shares at a price of HK$112.70 each. Based on current exchange rates, this offering is valued at approximately US$10.2 billion. Alibaba anticipates the deal to conclude on Aug. 26, pending usual closing conditions. The firm has allocated these funds specifically for investments across its AI initiatives.
According to Alibaba, all net proceeds from the offering will be dedicated to enhancing its comprehensive artificial intelligence capabilities. The company plans to invest in expanding and upgrading computing infrastructure that underpins AI products and cloud services. As demand for computing capacity surges, Alibaba Cloud has become a vital element of the company’s tech operations. The group has also increased its expenditure on models, data processing, and supporting infrastructure, with these investments growing in tandem with rising revenue from AI-related products and services.
The primary purpose of this placement is to attract non-U.S. investors outside the United States via offshore transactions. The issue price of HK$112.70 reflects an 8.4% discount compared to Alibaba’s HK$123 closing price on Friday. Early Monday trading saw Alibaba’s Hong Kong-listed shares plummet sharply, falling as much as 10% to HK$110.10. The company also maintains a New York listing through American depositary shares under the BABA ticker. Once completed, the new share issuance will increase the company’s equity base.
Growing AI expenditure driven by cloud demand
Alibaba has already ramped up capital investments to expand computing capacity for artificial intelligence. During the quarter ending June 30, capital expenditures reached RMB67.68 billion, equivalent to about US$10 billion. This amount marked a 75% increase from RMB38.68 billion in the same period the previous year. The company attributes this growth to ongoing investments in AI infrastructure, heightened demand for computing power, and rising chip component costs. This increased spending coincided with another quarter of rapid expansion in Alibaba’s cloud business.
In the June quarter, Alibaba posted revenue of RMB268.95 billion, approximately US$39.6 billion, reflecting a 9% rise year-over-year. Revenue from AI Cloud and Compute Services alone reached RMB48.44 billion, or about US$7.1 billion. This segment experienced a 45% annual growth during the same period. AI-related product revenue hit RMB12.38 billion, demonstrating triple-digit year-on-year growth for the 12th consecutive quarter. These figures underscore the extensive activity within Alibaba’s AI and cloud sectors.
The HK$80 billion raise supports a three-year AI and cloud investment pledge
The HK$80 billion offering follows a significant investment commitment announced by Alibaba in February 2025. The company declared it would allocate at least RMB380 billion over three years to artificial intelligence and cloud infrastructure, surpassing its total expenditure in these areas over the previous decade. The proceeds from the current share sale will provide additional capital specifically for expanding Alibaba’s full-stack AI capabilities. This infusion will supplement an ongoing investment program that predates this offering.
This surge in capital expenditure has coincided with a decline in quarterly profits and significant cash outflows. Alibaba reported 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 attributed to increased spending on cloud infrastructure. The new equity placement injects fresh funds into the company, supporting its previously announced AI and cloud investment initiatives. The deal is scheduled to close on Aug. 26 under the agreed terms.