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Alibaba said on Sunday it intends to sell 710 million new shares at HK$112.70 each in a placement that represents a 3.6 percent discount to the previous close, according to a Reuters report on the proposed transaction. The Chinese tech group will direct 100 percent of the net proceeds toward investments in full-stack AI capabilities that span custom chips, computing infrastructure and the development plus deployment of AI models. Reuters noted that the deal would constitute the largest-ever primary follow-on offering by a Hong Kong-listed company while ranking as the world’s third-largest such sale this year after those completed by Alphabet and Intel. The company framed the capital raise as a step to extend its global AI leadership.
Strong demand from sovereign wealth funds and global long-only investors prompted Alibaba to increase the size of the offering after it became oversubscribed, two people familiar with the matter told Reuters. The sources, who declined to be named because the information was not public, said banks received pre-launch indications of interest exceeding the final deal size. Alibaba increased quarterly capital spending to nearly $10 billion in the period ended in June as it accelerates AI-related projects, separate earnings data show. The placement comes with a 90-day lockup on further share sales.
Alibaba reported a 45 percent year-on-year increase in revenue from its cloud and AI businesses in the April-to-June quarter while capital expenditure climbed 75 percent to 67.7 billion yuan, the South China Morning Post reported citing the company’s results. Net profit fell 75 percent to approximately $1.5 billion and the firm recorded a free-cash outflow of $6.6 billion during the period as spending on AI infrastructure intensified, according to Financial Times figures. Chief Executive Eddie Wu Yongming said during the earnings call that investments in AI computing were expected to break even within three years, with the payback period potentially shortening to two years as margins improve.
The latest share placement builds on Alibaba’s multi-year shift from its origins as an e-commerce platform into a full-stack AI competitor that develops proprietary chips, large language models and applications, Nikkei Asia reported. The company has gained attention for its open-source Qwen family of models, which early benchmarks positioned strongly in areas such as agentic coding where systems generate and debug code with minimal human direction, the Financial Times noted in its coverage. A company statement said the equity placement was being undertaken to extend global AI leadership through expanded and enhanced infrastructure.
AI investment has triggered a surge in Chinese capital market activity this year with valuations for tech companies reaching new highs amid intense competition to build frontier models, according to a Financial Times assessment. Unitree, a humanoid robotics group, raised $900 million last week in a deal that saw its shares surge more than 600 percent on debut after attracting demand 5,500 times the available retail allotment, the newspaper reported. Such transactions illustrate the broader market enthusiasm that Alibaba is tapping with its record Hong Kong placement.
China International Capital Corp. and UBS Group AG are arranging the transaction, terms reviewed by Bloomberg showed. The offering targets non-U.S. investors under Regulation S and remains subject to market conditions and final approvals. Alibaba’s move aligns with sector-wide efforts to secure computing resources and talent as the addressable market for full-stack AI providers expands rapidly.
