HONG KONG / RankWire.AI / – Alibaba Group has announced the pricing of an HK$80 billion share offering, aiming to boost investments in artificial intelligence and cloud computing infrastructure. The Chinese tech giant 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. The company expects the transaction to close on Aug. 26, pending standard closing conditions, with the proceeds designated for expanding its AI operations.
Alibaba stated that all net proceeds from the offering will fund its comprehensive artificial intelligence development. This includes spending on expanding and enhancing computing infrastructure that underpins its AI products and cloud services. As demand for computing capacity grows, Alibaba Cloud has become a vital component of its technological operations. The company has also increased investments in models, data processing, and supporting infrastructure, which have grown alongside rising revenue from AI-related products and services.
The placement targets non-U.S. investors outside the United States through offshore transactions. The issue price of HK$112.70 represents an 8.4% discount compared to Alibaba’s HK$123 closing price on Friday. Following this, Alibaba’s Hong Kong-listed shares fell sharply in early Monday trading, dropping as much as 10% to HK$110.10. The company also maintains a New York listing through American depositary shares under the BABA ticker. Once the offering concludes, the new shares will expand Alibaba’s equity base.
Rising AI investment driven by cloud demand
Alibaba has already ramped up capital expenditure as it increases computing capacity for artificial intelligence. During the quarter ending June 30, capital spending reached RMB67.68 billion, roughly US$10 billion, which is a 75% rise from RMB38.68 billion in the same period last year. This surge is attributed to ongoing AI infrastructure investments, heightened computing demand, and rising chip component prices. The spending boost coincided with another quarter of rapid growth in Alibaba’s cloud business.
The company reported quarterly revenue of RMB268.95 billion, approximately US$39.6 billion, marking a 9% increase compared to the previous year. Revenue from AI Cloud and Compute Services alone reached RMB48.44 billion, or about US$7.1 billion, growing 45% annually during the quarter. AI-related product revenue hit RMB12.38 billion, achieving triple-digit year-on-year growth for the twelfth consecutive quarter. These figures highlight the significant scale of Alibaba’s AI and cloud activities.
Funding aligns with multi-year AI and cloud commitments
This HK$80 billion issuance follows an investment pledge made by Alibaba in February 2025, which commits to spending at least RMB380 billion on AI and cloud infrastructure over three years. The planned expenditure exceeds its combined investment in these areas during the past decade. The proceeds from the current share sale will bolster Alibaba’s existing full-stack AI investment program, with funds already allocated prior to this offering.
The increased capital spending has coincided with declining quarterly profits and substantial cash outflows. Alibaba reported a net income of RMB10.44 billion for the June quarter, down 75% from a year earlier, while free cash flow showed a net outflow of RMB44.67 billion, mainly due to heightened cloud infrastructure investments. The new equity raise provides additional funding while Alibaba proceeds with its ongoing AI and cloud investments, with the transaction scheduled to close on Aug. 26 under the agreed terms.