Alibaba Group Holding will issue HK$80 billion (US$10.2 billion) worth of new shares and use all of the proceeds to invest in AI, the Chinese tech giant said on Sunday.
The move aims to “extend the company’s global AI leadership”, it said, adding that Alibaba would use the funds raised to “invest in its full-stack AI capabilities”, including expanding and enhancing its AI infrastructure.
The decision underscores Alibaba’s efforts over the past few years to transform from an e-commerce giant into a full-stack AI player with businesses spanning chips, computing infrastructure, large language models and AI applications.
Banks have received pre-launch indications of interest in excess of the deal size “on the back of strong interest received from sovereign wealth funds and global long-only investors”, according to a person familiar with the matter. Alibaba increased the size of the offering to HK$80 billion because of strong investor demand, the source added.
Last week, Alibaba announced a 45 per cent year-over-year jump in its April-to-June quarterly revenue in cloud and AI businesses, with capital expenditure expanding 75 per cent from a year earlier to 67.7 billion yuan (US$10 billion).
Alibaba was expecting its investments in AI computing to break even within three years, with the payback period potentially shortened to about two years as gross margins continued to rise, Alibaba Group CEO Eddie Wu Yongming said during an earnings call on Thursday.
The e-commerce and AI giant will also use the share-sale proceeds to boost AI innovation, according to another person familiar with the deal. The offering would be one of China’s largest AI-dedicated financing cases, as well as Alibaba’s first new share placement following its Hong Kong listing in 2019. No further details about the offering were disclosed.
Alibaba’s latest AI-financing plans are set to further intensify the US-China AI competition as top US labs and hyperscalers also move to raise substantial new capital.
“This news reflects Alibaba’s plan to continue ramping up its AI investments, as its past earnings have already shown rapid growth in AI-related spending,” said Kenny Ng, a strategist at Everbright Securities International. He noted that the company’s capital expenditures would likely remain high to support this push.
The immediate market reaction, however, looks to depend on the final pricing of the new shares. “If the placement price comes with a steep discount, it could put more pressure on the stock,” Ng added. “If the discount is narrower, the pressure on the share price will be relatively mild.”
During Thursday’s earnings call, Wu added that the company had already spent 190 billion yuan in capital expenditure by the end of June. In February 2025, Alibaba announced a three-year commitment of 380 billion yuan in AI infrastructure investment.
Alibaba operates the Qwen family of large language models, which the company recently said had recorded more than 3 billion downloads globally.
More than 2 billion Qwen downloads were recorded in 2026, far ahead of all other AI model providers, according to a report earlier this month by the open-source developer platform Hugging Face. The platform attributed Qwen’s popularity to factors including a consistent pace of flagship model releases and offerings covering a wide range of sizes and use cases.
Alibaba has also reported growing momentum from its T-Head semiconductor unit. The company’s Zhenwu chips had served more than 650 customers on Alibaba Cloud, while its Zhenwu M890 AI processor began commercial-scale deployment this month.
Alibaba’s AI Cloud and Compute Services, a new reporting segment that covers its cloud business and T-Head unit, recorded 48.4 billion yuan in revenue for the three months ended June 30, marking its fastest growth in 22 quarters. Alibaba Group owns the South China Morning Post.
“We expect supply to continue ramping up in the second half of the year to meet strong customer demand,” Wu said last week.
Anthropic, the company behind the Claude large language models, confidentially filed its prospectus in June, paving the way for what many expect to be the largest-ever initial public offering. The company was valued at US$965 billion after a US$65 billion Series H funding round in May.
As of July 9, investment-grade bond issuance from Google, Amazon, Meta Platforms, Nvidia, Oracle and SpaceX reached around US$240 billion, more than double the total for 2025, according to Morningstar.
Alibaba is among global AI players locked in a fierce race to secure market leadership despite mounting pressure to justify their ever-expanding AI investments.
While Alibaba’s AI revenue climbed, its latest quarterly profit plunged 75 per cent, year over year. The company’s New York-listed shares fell 8.57 per cent on Friday, while its Hong Kong-listed shares slid 2.54 per cent.
Domestic rival Tencent Holdings also said earlier this month that its AI capital expenditure jumped 176 per cent, year on year, to 52.8 billion yuan for the quarter ended in June. Net profit increased merely 0.8 per cent to 68.4 billion yuan from 63.1 billion yuan in the same period last year.
US Big Tech’s AI spending, however, dwarfs that of Chinese tech giants. Amazon, Microsoft, Alphabet and Meta are collectively expected to spend around US$700 billion this year, translating to an average of US$44 billion per company per quarter. -- SOUTH CHINA MORNING POST
