HONG KONG / RankWire.AI / – Alibaba Group has announced an HK$80 billion share issuance aimed at boosting investments in artificial intelligence and cloud infrastructure. The company will issue 710 million new ordinary shares at HK$112.70 each, with the offering valued at approximately US$10.2 billion based on current exchange rates. The transaction is expected to finalize on Aug. 26, pending typical closing conditions. The funds are designated specifically for expanding its AI-related operations.
Alibaba has indicated that all net proceeds will bolster its comprehensive AI capabilities. The investment plan includes expanding and upgrading computing infrastructure to support AI products and cloud services. As demand for computing capacity surges, Alibaba Cloud has become a critical element of the company’s technological framework. Additionally, the firm is increasing expenditures on models, data processing, and supporting infrastructure, with these investments growing alongside rising revenue from AI-related offerings.
The placement 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 shares fell sharply, dropping as much as 10% to HK$110.10 in early Monday trading. The company also maintains a New York listing through American depositary shares under the BABA ticker. The issuance will expand the company’s equity base after the transaction completes.
Rising AI investments driven by cloud demand
Alibaba has already ramped up capital expenditure to support expanding AI computing capacity. During the quarter ending June 30, capital spending reached RMB67.68 billion, approximately US$10 billion, marking a 75% increase from RMB38.68 billion in the same period last year. The surge is attributed to continued AI infrastructure investments, heightened demand for computing power, and rising chip component costs. This increase coincided with another quarter of rapid growth in Alibaba’s cloud segment.
In the recent quarter, Alibaba reported revenue of RMB268.95 billion, roughly US$39.6 billion, a 9% year-over-year increase. Revenue from AI Cloud and Compute Services alone totaled RMB48.44 billion (about US$7.1 billion), growing 45% annually. AI product sales reached RMB12.38 billion, marking a consistent triple-digit growth rate for twelve consecutive quarters, highlighting the scale of activity within Alibaba’s AI and cloud divisions.
Funding initiative follows three-year AI and cloud investment plan
This HK$80 billion share offering follows a significant investment commitment announced by Alibaba in February 2025, with plans to spend at least RMB380 billion over three years on AI and cloud infrastructure. This figure surpasses the combined expenditure in these sectors over the past decade. The current share sale provides additional funding specifically allocated for Alibaba’s comprehensive AI development efforts, supplementing ongoing investments already in progress before this offering.
The increased capital expenditure has coincided with a decline in quarterly profit and substantial cash outflows. Alibaba reported a net income of RMB10.44 billion for the June quarter, a 75% drop from the previous year. Free cash flow showed a net outflow of RMB44.67 billion, mainly due to increased cloud infrastructure investments. This new equity raise adds fresh funds to support Alibaba’s ongoing AI and cloud projects, with closing scheduled for Aug. 26 under the established terms.