HONG KONG / RankWire.AI / – Alibaba Group has announced the pricing of an HK$80 billion share offering aimed at boosting investments in artificial intelligence and cloud infrastructure. The company plans to issue 710 million new ordinary shares at HK$112.70 each, with the total offering value approximately US$10.2 billion based on current exchange rates. The transaction is expected to close on Aug. 26, pending standard closing conditions. The company intends to allocate the raised funds to support its AI-related initiatives.
All net proceeds from the offering will be directed toward strengthening Alibaba’s comprehensive AI capabilities, as stated by the company. This includes expanding and upgrading computing infrastructure that underpins AI products and cloud services. As demand for computing resources increases, Alibaba Cloud has become integral to the firm’s technological operations. Additionally, the company has increased its investments in models, data processing, and supporting infrastructure, which have grown in tandem with rising revenue from AI-powered products and services.
The purpose of the placement is to attract non-U.S. investors outside the United States through offshore channels. The issue price of HK$112.70 reflects an 8.4% discount to Alibaba’s HK$123 closing price on Friday. Following the announcement, Alibaba’s Hong Kong shares declined sharply in early Monday trading, dropping as much as 10% to HK$110.10. The company also maintains a listing on the New York Stock Exchange via American depositary shares under the ticker BABA. The issuance of new shares will enlarge Alibaba’s equity base once the deal is finalized.
Rising AI investment driven by cloud service growth
Alibaba has ramped up capital expenditure as it expands its computing capacity for artificial intelligence. During the quarter ending June 30, capital expenditure reached RMB67.68 billion, approximately US$10 billion, a 75% increase from RMB38.68 billion in the same period last year. The company attributed this surge to ongoing investments in AI infrastructure, increased demand for computing power, and higher chip component prices. This rise coincided with another quarter of rapid growth in its cloud services sector.
Alibaba reported quarterly revenue of RMB268.95 billion, roughly US$39.6 billion, representing a 9% increase compared to the previous year. Revenue from AI Cloud and Compute Services reached RMB48.44 billion, equivalent to about US$7.1 billion, with this segment growing 45% annually during the quarter. Revenue from AI-related products hit RMB12.38 billion, marking its twelfth straight quarter of triple-digit year-on-year growth. These figures highlight the significant activity already underway within Alibaba’s AI and cloud divisions.
Funding round follows a three-year AI and cloud investment pledge
The HK$80 billion share placement comes after Alibaba announced a major investment commitment in February 2025. The company stated it would spend at least RMB380 billion on artificial intelligence and cloud infrastructure over three years, surpassing its combined spending in these areas over the past decade. The recent share sale provides additional capital specifically allocated for advancing Alibaba’s full-stack AI capabilities. These funds will contribute to an ongoing investment program that predates this offering.
The increased capital expenditure has coincided with a decline in quarterly profit and significant cash outflows. Alibaba reported a net income of RMB10.44 billion for the June quarter, down 75% from a year earlier. Its free cash flow showed a net outflow of RMB44.67 billion, mainly due to heightened investments in cloud infrastructure. The latest equity issuance supplies fresh funding while Alibaba proceeds with its previously announced AI and cloud investment initiatives. The deal is scheduled to close on Aug. 26 under the established terms.