On Sunday, August 23, Alibaba Group Holding formally announced the initiation of a significant new share issuance in Hong Kong, valued at ₹95,000 crore (approximately US$10.2 billion).
The total capital garnered from this venture is designated for the augmentation of its artificial intelligence (AI) capabilities.
This undertaking is poised to emerge as the third-largest primary follow-on share sale globally in 2023, following substantial offerings from industry titans Alphabet and Intel.
The renowned Chinese conglomerate disclosed its intentions to issue shares worth HK$80 billion (equivalent to ₹95,000 crore or US$10.2 billion) as part of its strategy to fortify its standing in the intensely competitive AI domain.
According to Alibaba Group, a significant portion of the proceeds will be allocated to “extend the company’s global AI leadership” and to “invest in comprehensive AI capabilities,” encompassing the expansion and enhancement of AI infrastructure.
Robust Investor Interest in Alibaba’s AI Investment
This placement is poised to be recorded as Hong Kong’s largest follow-on offering by a corporation, as evidenced by data collected by Bloomberg.
Furthermore, it represents the most substantial share sale in the city since 2021, when technology investment firm Prosus NV executed a monumental $14.7 billion share transaction involving Tencent Holdings Ltd., as per Bloomberg analysis.
In response to strong investor enthusiasm, Alibaba consequently amplified the offering to HK$80 billion, as reported by the South China Morning Post, citing informed sources.
This transaction marks Alibaba’s inaugural new share placement since its Hong Kong listing in 2019.
Alibaba intends to issue 710 million shares at a price of HK$112.70 each, which translates to a 3.6 percent discount relative to its latest closing price, according to a term sheet assessed by Reuters.
Intensified Investments in AI by Alibaba
This fundraising initiative is reflective of Alibaba’s vigorous investment in AI computing, cloud services, specialized chips, and large language models.
In the quarter ending in June, its cloud and AI divisions experienced a remarkable 45 percent year-on-year surge in revenue, concomitantly reflecting a staggering 75 percent increase in capital expenditures, reaching ₹80,000 crore (US$10 billion).
Eddie Wu Yongming, Alibaba’s Chief Executive Officer, projected that the firm’s investment in AI computing could achieve breakeven within three years, with a potential reduction of the payback period to approximately two years as gross margins improve.
Up until the close of June, Alibaba had expended ₹2.25 lakh crore (190 billion yuan) in capital expenditure. In February 2025, it pledged an additional ₹4.5 lakh crore (380 billion yuan; US$56.4 billion) over a three-year horizon aimed at bolstering its AI infrastructure.
Qwen and AI Chip Innovations Fuel Alibaba’s Aspirations
Alibaba’s initiatives in AI extend beyond mere cloud infrastructure enhancements. Its Qwen family of large language models has cumulatively garnered over 3 billion downloads worldwide, while the T-Head semiconductor division is actively broadening its AI chip production.
Alibaba’s Zhenwu chips have successfully catered to more than 650 clients within Alibaba Cloud. Notably, the Zhenwu M890 AI processor also transitioned into commercial-scale deployment earlier this month.
For the quarter concluding on June 30, Alibaba’s AI Cloud and Compute Services segment generated an impressive revenue of ₹57,000 crore (48.4 billion yuan), marking its most rapid growth in over two years.
“We anticipate that supply will continue to ramp up in the latter half of the year to satisfy the robust customer demand,” Wu remarked.
Increased Scrutiny for Alibaba Over Rising AI Expenses
This ambitious fundraising venture comes on the heels of a 75 percent plunge in Alibaba’s quarterly net profit in comparison to the previous year, a consequence of escalating AI-related expenditures. Nevertheless, the company’s revenue swelled by 9 percent, reaching nearly ₹2.24 lakh crore (269 billion yuan).
On the trading front, Alibaba’s shares listed in New York experienced a decline of 8.57 percent on Friday, while those in Hong Kong fell by 2.54 percent.
In the unfolding global competition for AI investment, Alibaba Group is ramping up its efforts. The capital expenditure for Tencent Holdings regarding AI surged by an extraordinary 176 percent year-on-year to ₹62,000 crore (52.8 billion yuan) in the recently concluded June quarter.
In contrast, U.S. technology firms are allocating resources on a far grander scale, with Amazon, Microsoft, Alphabet, and Meta projected to collectively invest around ₹62 lakh crore (US$700 billion) in capital expenditures this fiscal year.
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