<\/p>\n
Alibaba Group Holding raised HK$80 billion ($10.2 billion) in Hong Kong\u2019s biggest follow-on offering, underscoring its willingness to amass and spend vast sums to take the lead in global artificial intelligence.<\/p>\n
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 \u2014 which was priced at a 3.6% discount to the Friday close of Alibaba\u2019s US-traded shares \u2014 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\u2019t public.<\/p>\n
The capital raising reflects Alibaba\u2019s eagerness to outspend and outrun Chinese rivals in the chase to define the frontier of AI development. Among the country\u2019s 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\u2019s most popular model family.<\/p>\n
Alibaba\u2019s 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.<\/p>\n
An Alibaba spokesperson did not immediately respond to a request for comment.<\/p>\n
\u201cWhy not bonds?\u201d said Vey-Sern Ling, managing director at Union Bancaire Privee. \u201cIt 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.\u201d<\/p>\n
Chinese AI leaders have so far shown restraint relative to American tech providers like Meta Platforms and Alphabet, who\u2019ve together earmarked trillions of dollars in a bid to stay ahead. Alibaba\u2019s 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.<\/p>\n
But the competition is intensifying, prices for hardware such as memory chips are skyrocketing, and companies fear missing out on revolutionary technology.<\/p>\n
Alibaba\u2019s placement is Hong Kong\u2019s biggest share sale since technology-investment firm Prosus NV sold $14.7 billion in shares of China\u2019s Tencent Holdings Ltd. in 2021, data compiled by Bloomberg show.<\/p>\n
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Alibaba\u2019s 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\u2019s putting the focus on long-term competitiveness.<\/p>\n
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.<\/p>\n
Michael Burry, the investor made famous in The Big Short, said he \u201ccannot bless\u201d Alibaba\u2019s new share issuance. \u201cThis is a new paradigm again for BABA, and its ROIC will continue to fall,\u201d he wrote in a social media post on Sunday.<\/p>\n
According to Burry, he had planned to flip back most of his entire Alibaba position that he had moved to JD.com \u201cnot too long ago,\u201d but \u201cno longer\u201d has the intention. Alibaba\u2019s stock price level would have to halve for him to get interested again, Burry added.<\/p>\n
The size of Alibaba\u2019s equity raise is \u201csignificant,\u201d 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.<\/p>\n
\u201cThe bigger question is how Alibaba monetizes this spend\u201d given weak Chinese consumer sentiment and intense competition in the country\u2019s AI market, she said. Alibaba intends to use the proceeds to invest in full-stack AI capabilities, including by expanding and enhancing its infrastructure.<\/p>\n
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.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Alibaba #raises #10bn #record #Hong #Kong #share #sale<\/p>\n","protected":false},"excerpt":{"rendered":"
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