HONG KONG / RankWire.AI / – Alibaba Group has announced the pricing of an HK$80 billion share issuance as part of its strategy to boost investments in artificial intelligence and cloud infrastructure. The firm will issue 710 million new ordinary shares at HK$112.70 each, valuing the offering at approximately US$10.2 billion based on current exchange rates. Alibaba anticipates completing the deal by Aug. 26, pending customary closing conditions. The company plans to allocate these funds toward expanding its AI operations.
Alibaba stated that all net proceeds from the offering will be directed toward enhancing its comprehensive artificial intelligence capabilities. The investment will cover upgrades and expansion of computing infrastructure supporting AI products and cloud services. As demand for computing resources continues to grow, Alibaba Cloud has become a vital component of the company’s technological ecosystem. Additionally, the company has increased spending on models, data processing, and related infrastructure, which has correlated with rising revenue from AI-related products and services.
This placement targets non-U.S. investors outside the United States via offshore transactions. The issue price of HK$112.70 reflects an 8.4% discount compared to Alibaba’s HK$123 closing price on Friday. The company’s Hong Kong-listed shares experienced a sharp decline early Monday, dropping as much as 10% to HK$110.10. Alibaba also maintains a listing in New York through American depositary shares under the BABA ticker. The issuance of new shares will broaden the company’s equity base upon settlement.
Rising AI investments driven by cloud service growth
Alibaba has ramped up capital expenditure as it expands its computing capacity for artificial intelligence. During the quarter ending June 30, capital spending reached RMB67.68 billion, equivalent to about US$10 billion. This figure marked a 75% increase from RMB38.68 billion in the same period last year. The company linked this growth to ongoing investments in AI infrastructure, rising demand for computing power, and increased chip component costs. This increase in spending coincided with a period of rapid expansion in its cloud services division.
In the latest quarter, Alibaba reported revenue of RMB268.95 billion, approximately US$39.6 billion, reflecting a 9% rise year-on-year. Revenue from AI Cloud and Compute Services alone reached RMB48.44 billion, or about US$7.1 billion. This segment experienced a 45% annual growth during the quarter. Revenue from AI-related products hit RMB12.38 billion, marking a record triple-digit growth for the twelfth straight quarter. These figures highlight the extensive activity across Alibaba’s AI and cloud sectors.
Funding effort follows a three-year investment pledge
The HK$80 billion placement comes after Alibaba’s significant investment commitment announced in February 2025. The company declared it would spend at least RMB380 billion on artificial intelligence and cloud infrastructure over three years—an amount surpassing its total expenditure in these sectors over the previous decade. The proceeds from the current share sale are designated specifically for expanding Alibaba’s full-stack AI capabilities. Consequently, the funds will bolster an investment program that was already underway prior to this offering.
The increased capital expenditure has coincided with lower quarterly profits and significant cash outflows. Alibaba reported a net income of RMB10.44 billion for the June quarter, down 75% from the same period last year. Its free cash flow showed a net outflow of RMB44.67 billion, mainly driven by intensified investment in cloud infrastructure. The fresh funding from this equity placement will support Alibaba’s ongoing AI and cloud investments, with the deal expected to close on Aug. 26 as per the stated terms.