Alibaba stock slumps in Hong Kong after $13 billion share placement to fund AI
Investors are worried about payback from Alibaba's massive artificial intelligence spending.
On August 24, the shares of Alibaba, a major Chinese e-commerce and cloud computing company, dropped sharply on the Hong Kong stock market. This decline came after the company announced a US$10.2 billion (S$13 billion) share placement to fund its growing investments in artificial intelligence (AI). The placement, which closed at HK$112.70 per share, was an 8.4% discount to the previous day's closing price.
The AI spending is aimed at bolstering Alibaba's competitive edge amidst the intensifying Sino-US tech rivalry and the company's pledge to invest $380 billion over three years in AI infrastructure. Despite the long-term benefits, the move led to a 10% drop in the company's shares to HK$110.10 in early trading. Industry experts noted that such dilution can negatively impact shareholders in the short-term, and the heavy capital expenditure may raise concerns among investors about the return on investment.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
