Hajra Naz
Alibaba is raising $10.2 billion through a major share sale in Hong Kong. The company says all of the net proceeds will go toward strengthening its AI capabilities.
That includes spending on AI infrastructure. The company wants to expand its computing capacity as demand for AI services continues to grow.
Alibaba plans to issue 710 million new shares. The shares will be priced at about $14.38 each. The new shares will represent around 3.6% of the company’s enlarged share capital.
The deal is significant for the Hong Kong market. It is the largest primary follow-on share sale ever completed by a company listed in Hong Kong. It is also one of the biggest share offerings announced anywhere in the world this year.
Alibaba Is Spending Heavily on AI
The new fundraising comes at an important time for Alibaba. The company recently reported a sharp decline in quarterly profit. Net profit fell 75% year over year. The main reason was increased spending on AI infrastructure.
Alibaba’s capital expenditure reached about $10.1 billion during the April-June quarter. That was a 75% increase from the same period a year earlier. The company is spending heavily to expand its computing capacity. It is also investing in the infrastructure needed to support its growing AI operations.
That spending is putting pressure on profits. However, Alibaba believes the investment can create stronger growth over time.
AI and Cloud Revenue Is Growing
Alibaba’s heavy AI spending is already showing some results. Revenue from its cloud and AI business increased 45% during the quarter. It reached roughly $7.2 billion. The company’s AI model services business is also expanding quickly. Its annual recurring revenue from AI model services has now passed $2.38 billion. That growth is giving Alibaba more confidence in its long-term AI strategy.
Alibaba CEO Eddie Wu has stressed the importance of building computing capacity early. His view is that the company needs enough infrastructure before it can fully benefit from the next phase of AI growth. The company is therefore spending heavily today. It hopes that investment will help it capture much larger AI demand in the future.
Alibaba Has Already Committed Billions to AI
The latest $10.2 billion fundraising is not Alibaba’s first major AI investment. The company previously committed around $56.5 billion to cloud and AI infrastructure over three years. Alibaba has already spent about half of that planned amount.
The company has also suggested that its total AI investment could eventually go beyond the original $56.5 billion target. That shows how important AI has become to Alibaba’s broader business strategy.
The company is investing across several areas. These include data centers, computing capacity, cloud infrastructure, and AI models.
Read More: Alibaba Introduces Qwen3.8-Max, Its Most Powerful AI Model
Alibaba Is Also Using Its Own AI Chips
Alibaba is also increasing the use of its own AI chips. The company is deploying these chips in its data centers. This could become an important part of its long-term AI strategy. Using internally developed chips could help Alibaba reduce some infrastructure costs.
It could also improve margins as the company expands its AI operations. The move gives Alibaba more control over its computing infrastructure. It may also reduce its dependence on external chip suppliers as AI demand continues to increase.
Alibaba’s AI Infrastructure Is Expanding Globally
Alibaba’s AI infrastructure plans are not limited to China. The company is also expanding its cloud network in international markets. Alibaba Cloud opened two new availability zones in Paris in June. The expansion gives the company another major cloud location in Europe.
It now has three major European cloud hubs. These include locations in France, Germany, and the UK. The international expansion could help Alibaba serve more customers outside China.
It also gives the company additional infrastructure for supporting growing demand for cloud and AI services.
Read More: Alibaba’s Qwen3.8 Could Disrupt Everything the West Has Built
Investors React to the Share Sale
Despite Alibaba’s ambitious AI plans, investors reacted negatively to the announcement. Alibaba shares fell by around 8% in Hong Kong after the fundraising plan was announced. The decline came as investors considered the impact of the new share sale. Issuing 710 million new shares will dilute existing shareholders. Investors are also watching the company’s rapidly increasing AI spending.
The size of Alibaba’s investment plans has raised concerns about how quickly those expenses will translate into profits. At the same time, the company is betting that AI will create much larger opportunities in the years ahead. Alibaba is choosing to spend heavily now. The goal is to build the infrastructure needed for future AI growth.
The $10.2 billion share sale gives the company additional funding for that strategy. With cloud revenue rising and AI services expanding, Alibaba is positioning AI as a major part of its future growth. The challenge will be turning that huge investment into sustainable returns.
