Alibaba seeks more than $10B in share sale to expand AI

Alibaba Group Holding Ltd. plans to raise approximately HK$80 billion ($10.2 billion) through a share sale, a move aimed at competing for global leadership in artificial intelligence. The company is offering 710 million shares at HK$112.7 each, which is about a 3.6 per cent discount to the closing price of its American depositary receipts on Friday.

This is expected to be the largest follow-on offering by a company in Hong Kong, and the biggest share sale in the city since 2021. The Chinese e-commerce giant is also increasing its quarterly capital spending to nearly $10 billion to maintain its position in the fiercely competitive global AI arena. The funds will be used to invest in full-stack AI capabilities, including expanding and enhancing its infrastructure.

Alibaba's profit decreased more than 75 per cent in the June quarter to 10.5 billion yuan ($1.6 billion), with a free-cash outflow of $6.6 billion due to the rising costs of AI projects and computing infrastructure. This year, Alibaba has reinforced its status as a global artificial intelligence leader, with its Qwen offering becoming the world's most popular model family.

The company is among the primary spenders on AI among its Chinese counterparts, investing in everything from chips and data centers to large-language model development.