Alibaba Plans $10.2 Billion Share Placement for AI Drive

Alibaba Group Holding announced plans on Sunday to raise approximately HK$80 billion, equivalent to $10.2 billion, through a new share issuance in Hong Kong.

The company intends to allocate all net proceeds from the equity placement to fund its global artificial intelligence initiatives, specifically to extend the Company's global AI leadership by investing in its full stack AI capabilities and enhancing its AI infrastructure. This move comes amid growing competition in the AI sector and follows a strong reception for its Qwen AI models.

The company reported nearly 269 billion yuan ($40 billion) in revenue for its most recent quarter, a 9% year-over-year increase, driven by demand for its AI-related products. Alibaba's capital expenditure in AI computing expanded by 75% year-over-year to 67.7 billion yuan ($10 billion) in its April-to-June quarter. The share offering is described as one of China's largest AI-dedicated financing cases and Alibaba's first new share placement since its Hong Kong listing in 2019.

Banks have indicated strong pre-launch interest from sovereign wealth funds and global long-only investors, leading Alibaba to increase the offering size. Alibaba Group CEO Eddie Wu Yongming stated during an earnings call on Thursday that the company expects its AI computing investments to break even within three years, potentially shortening the payback period to about two years as gross margins rise.