HONG KONG / RankWire.AI / – Alibaba Group has announced the pricing of a HK$80 billion share issuance as part of its strategic push into artificial intelligence and cloud technology. The tech giant will issue 710 million new ordinary shares at HK$112.70 each, which based on current exchange rates, translates to approximately US$10.2 billion. The company expects the deal to conclude on Aug. 26, pending standard closing conditions. The funds are earmarked specifically for expanding investments in its AI operations.
Alibaba stated that all net proceeds from this offering will be directed towards enhancing its comprehensive artificial intelligence capabilities. The funds will support expansion and upgrades across its computing infrastructure that underpins AI products and cloud services. As demand for computing power surges, Alibaba Cloud has become integral to the company’s technological backbone. Additionally, Alibaba has increased investment in models, data processing, and associated infrastructure, reflecting the growth in revenue from AI-related products and services.
This issuance targets non-U.S. investors outside the United States through offshore channels. The issue price of HK$112.70 represents an 8.4% discount 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 in early Monday trading. The company also maintains a listing on the New York Stock Exchange via American depositary shares under the ticker BABA. The new issuance will increase the company’s equity base once the offering is finalized.
Rising AI investment driven by cloud service demand
Alibaba has already ramped up capital expenditure as it scales up computing capacity for artificial intelligence. During the quarter ending June 30, the company’s capital expenditure reached RMB67.68 billion, approximately US$10 billion, representing a 75% increase from RMB38.68 billion in the same period last year. Alibaba attributed this rise to ongoing investments in AI infrastructure, increased demand for computing resources, and higher chip component prices. These investments coincided with another quarter of rapid expansion within its cloud business.
For the quarter, Alibaba reported revenue of RMB268.95 billion, roughly US$39.6 billion, marking a 9% increase from the previous year. Revenue from AI Cloud and Compute Services alone hit RMB48.44 billion, or about US$7.1 billion. That segment experienced a 45% year-over-year growth during the same period. Revenue from AI-related products reached RMB12.38 billion, showing triple-digit growth for the twelfth consecutive quarter. These figures underscore the substantial activity already taking place within Alibaba’s AI and cloud divisions.
The capital raise aligns with a multi-year AI and cloud investment plan
The HK$80 billion share placement follows Alibaba’s announcement of a major investment commitment made in February 2025. The company disclosed plans to allocate at least RMB380 billion over three years towards artificial intelligence and cloud infrastructure, surpassing its combined spending in these sectors over the previous decade. This recent share offering provides fresh capital that specifically supports Alibaba’s extensive full-stack AI development. The funds will be channeled into an ongoing investment program that was already in progress prior to this offering.
The increase in capital spending has coincided with a dip in quarterly profit and substantial cash outflows. Alibaba reported a net income of RMB10.44 billion for the June quarter, reflecting a 75% decline compared to the previous year. Free cash flow showed a net outflow of RMB44.67 billion, largely due to heightened investments in cloud infrastructure. The new equity issuance brings in additional funding while Alibaba continues executing its pre-existing AI and cloud growth strategy. The closing is scheduled for Aug. 26 under the terms outlined in the offering.