Alibaba shares tumbled as much as 10% in Hong Kong on Monday after the Chinese technology giant priced a massive HK$80 billion ($10.2 billion) share placement to accelerate its artificial intelligence ambitions.
Alibaba share price (Source: Google Finance)
Alibaba will issue 710 million new shares at HK$112.70 each to non-US investors, compared with Friday’s closing price of HK$123. The placement represents roughly 3.6% of Alibaba's enlarged share capital and is expected to close on Aug. 26. The company said 100% of the net proceeds will be invested in its full-stack AI capabilities, including expanding AI infrastructure.
The fundraising is reportedly the largest primary follow-on share offering ever by a Hong Kong-listed company and the third-largest globally in 2026. Despite concerns about dilution, investor demand was strong. Reuters reported around $28 billion of orders for the shares, including interest from major sovereign investors.
Alibaba Doubles Down on AI Despite Profit Hit
The share sale comes just days after Alibaba reported a 75% year-over-year decline in quarterly net profit as its aggressive AI expansion drove capital expenditure sharply higher.
Alibaba invested nearly $10 billion in capex during the June quarter, up 75% from a year earlier. However, there are signs that the spending is translating into growth. AI Cloud and Compute Services revenue climbed 45% year over year to about $7.1 billion, its fastest cloud growth in 22 quarters. AI-related product revenue has now recorded triple-digit growth for 12 consecutive quarters.
Alibaba previously committed at least 380 billion yuan to AI and cloud infrastructure over three years. The company reportedly believes returns from its AI investment could arrive faster than previously expected as demand for computing capacity rises and Alibaba deploys more proprietary chips in its data centers.
The company is also pushing on the model side. Alibaba launched its Wan3.0 AI video-generation model on Monday.
For investors, the question is now whether Alibaba's accelerating cloud and AI revenue can justify the enormous capital bill. Monday's share-price drop shows the market is not yet convinced.