Alibaba raises $10bn in record Hong Kong share sale

Alibaba Group Holding raised HK$80 billion ($10.2 billion) in Hong Kong’s biggest follow-on offering, underscoring its willingness to amass and spend vast sums to take the lead in global artificial intelligence.

The online retail giant-turned-AI player sold 710 million shares at HK$112.70 each and its stock slumped 8.5% Monday, the most since early 2025. Still, the deal — which was priced at a 3.6% discount to the Friday close of Alibaba’s US-traded shares — attracted demand from institutional investors for almost three times the offering, according to people familiar with the matter who asked not to be named as the information isn’t public.

The capital raising reflects Alibaba’s eagerness to outspend and outrun Chinese rivals in the chase to define the frontier of AI development. Among the country’s big technology firms, Alibaba has come closest to the huge outlays of its US peers. The company has sold off assets and pledged to spend more than 380 billion yuan ($56.5 billion) over three years on AI, from chips and data centres to large-language model development. Its flagship Qwen offering is now the world’s most popular model family.

Alibaba’s top two executives both purchased company shares on Monday. Chairman Joseph Tsai purchased about HK$80 million worth of shares, while chief executive officer Eddie Wu acquired about HK$40 million, according to filings with the Hong Kong stock exchange.

An Alibaba spokesperson did not immediately respond to a request for comment.

“Why not bonds?” said Vey-Sern Ling, managing director at Union Bancaire Privee. “It tells me that they may need more funds than we expect for AI investments and also they may be rushing to be ahead of other companies.”

Chinese AI leaders have so far shown restraint relative to American tech providers like Meta Platforms and Alphabet, who’ve together earmarked trillions of dollars in a bid to stay ahead. Alibaba’s home rival Baidu has no plan for a new share issuance, as its existing funds and operating cash flow are sufficient, a company spokesperson said Monday.

But the competition is intensifying, prices for hardware such as memory chips are skyrocketing, and companies fear missing out on revolutionary technology.

Alibaba’s placement is Hong Kong’s biggest share sale since technology-investment firm Prosus NV sold $14.7 billion in shares of China’s Tencent Holdings Ltd. in 2021, data compiled by Bloomberg show.

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Alibaba’s concentrated effort to challenge Anthropic PBC and OpenAI is already eroding margins, while anemic domestic consumption dogs its mainstay online retail business. The company amped up its capital spending in the June quarter to nearly $10 billion and said it’s putting the focus on long-term competitiveness.

Some investors question whether Alibaba is getting enough for its capital. Is cloud-computing division is racking up double-digit percentage growth and AI-related revenue gains are in triple-digit territory. But like many of its peers, Alibaba has yet to show how it will derive sustainable, longer-term revenue from AI services.

Michael Burry, the investor made famous in The Big Short, said he “cannot bless” Alibaba’s new share issuance. “This is a new paradigm again for BABA, and its ROIC will continue to fall,” he wrote in a social media post on Sunday.

According to Burry, he had planned to flip back most of his entire Alibaba position that he had moved to JD.com “not too long ago,” but “no longer” has the intention. Alibaba’s stock price level would have to halve for him to get interested again, Burry added.

The size of Alibaba’s equity raise is “significant,” but possible demand from financial institutions and sovereign-wealth funds should soften some concerns about dilution, said Charu Chanana, chief investment strategist at Saxo Markets.

“The bigger question is how Alibaba monetizes this spend” given weak Chinese consumer sentiment and intense competition in the country’s AI market, she said. Alibaba intends to use the proceeds to invest in full-stack AI capabilities, including by expanding and enhancing its infrastructure.

Alibaba will be subject to a lockup of 90 days. China International Capital Corp., HSBC Holdings Plc, Morgan Stanley and UBS Group AG are arranging the deal, according to the terms.

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