HONG KONG / RankWire.AI / – Alibaba Group has announced the pricing of an HK$80 billion share placement aimed at boosting its investments in artificial intelligence and cloud computing infrastructure. The Chinese tech giant will issue 710 million new ordinary shares at HK$112.70 each, which based on current exchange rates, equates to approximately US$10.2 billion. The company expects the deal to be finalized by Aug. 26, pending standard closing conditions. The funds are designated specifically for expanding its AI operations.
Alibaba stated that all net proceeds from this issuance will be dedicated to enhancing its comprehensive artificial intelligence capabilities. The planned allocation includes expanding and upgrading infrastructure that underpins its AI products and cloud services, with Alibaba Cloud increasingly serving as a core component of the company’s technology platform as demand for computing power continues to grow. The company has also ramped up investments in models, data processing, and supporting infrastructure, which have grown in tandem with rising revenue from AI-related products and services.
This offering is targeted at non-U.S. investors outside the United States through offshore channels. The issue price of HK$112.70 reflects an 8.4% discount compared to Alibaba’s HK$123 closing price on Friday. On the first trading day Monday, Alibaba’s Hong Kong-listed shares dropped sharply and declined as much as 10% to HK$110.10. The firm also maintains a listing in New York via American depositary shares under the ticker BABA. Once completed, the new shares will expand Alibaba’s equity base.
Increased AI investments driven by rising cloud demand
Alibaba has already significantly increased capital expenditure to scale up computing capacity for artificial intelligence, with capital outlays reaching RMB67.68 billion in the quarter ending June 30, roughly US$10 billion. This figure represents a 75% rise from RMB38.68 billion during the same period last year, driven by ongoing investments in AI infrastructure, heightened demand for computing resources, and higher chip component prices. These spending increases coincided with another quarter of rapid growth in its cloud segment.
For the quarter, Alibaba reported revenue of RMB268.95 billion, approximately US$39.6 billion, reflecting a 9% increase year-on-year. Revenue from AI Cloud and Compute Services alone reached RMB48.44 billion, about US$7.1 billion, growing 45% annually during that period. Revenue from AI-related products hit RMB12.38 billion, posting triple-digit growth for the 12th consecutive quarter. These figures underscore the substantial scale of Alibaba’s ongoing activities in AI and cloud technology sectors.
Funding round aligns with a three-year AI and cloud investment pledge
This HK$80 billion share placement follows a major investment commitment announced by Alibaba in February 2025, where the company declared its intention to allocate at least RMB380 billion over three years towards artificial intelligence and cloud infrastructure. This planned expenditure surpasses the combined investments made in those areas over the past decade. The new share issuance provides additional capital specifically earmarked for Alibaba’s full-stack AI initiatives, meaning the funds will support an ongoing investment program that was already in progress before this offering.
The surge in capital expenditure has been accompanied by a decline in quarterly profit and significant cash outflows. Alibaba’s net income for the June quarter was RMB10.44 billion, down 75% compared to a year earlier, while free cash flow experienced a net outflow of RMB44.67 billion, primarily due to increased spending on cloud infrastructure. The latest equity offering injects fresh funds into the company as it continues executing its previously announced AI and cloud investment plans, with completion scheduled for Aug. 26 under the established closing conditions.