China’s Alibaba said on Sunday it plans to raise HK$80 billion ($10.2 billion) through a share placement to finance the development of artificial intelligence, in what would become the largest-ever primary follow-on offering by a Hong Kong-listed company.
The planned transaction would also rank as the world’s third-largest primary follow-on share sale this year, behind offerings from Alphabet and Intel, highlighting the scale of capital being directed towards artificial intelligence infrastructure and development.
Alibaba said it intends to use 100% of the net proceeds from the placement to invest in its “full stack” AI capabilities. The investment category includes chips, infrastructure and the development and deployment of AI models, although the company did not provide a further breakdown of how the funds would be allocated.
A term sheet reviewed by Reuters showed that Alibaba planned to sell 710 million ordinary shares at HK$112.70 each, representing a 3.6% discount to the company’s most recent closing price.
The fundraising comes shortly after Alibaba reported a sharp decline in quarterly profit as it accelerated spending on AI-related infrastructure. Last week, the company said its net profit for the April-to-June quarter fell 75% from a year earlier, while it continued to increase capital expenditure.
Alibaba said it had already spent nearly half of its three-year capital expenditure investment plan. At the same time, the company said the expected payback period on its AI-related investments was on track to fall to 2.5 years from three years, driven by surging demand.
“In order to be able to capture that future growth, we first need to make these capex investments to build out the necessary compute capacity,” chief executive Eddie Wu said on an earnings call.
The scale of the planned placement reflects the growing costs associated with competing in artificial intelligence, where companies are investing heavily in computing power, chips, data centres and cloud infrastructure. Since 2022, the global AI boom has fuelled substantial capital spending by technology companies in both the United States and China.
Investor demand for Alibaba’s offering has reportedly been strong. Two people familiar with the deal told Reuters that sovereign wealth funds were among investors showing interest. They could not be named because the information was not public.
The company subsequently increased the size of the offering after the deal was oversubscribed, the people familiar with the matter said.
Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners for the offering, according to one of the sources and a third person with knowledge of the matter. The banks did not immediately respond to a Reuters request for comment.
Alibaba said the share placement was not registered under US securities laws as an offshore transaction, meaning American investors were not eligible to participate.
The fundraising also places Alibaba within a much broader global technology spending race. The four major US hyperscalers — Microsoft, Amazon, Alphabet and Meta — are together expected to spend roughly $725 billion in capital expenditures in 2026, much of it connected to AI data centres, chips and cloud infrastructure.
For Alibaba, the record-scale share placement underscores the financial commitment required to build its AI capabilities at a time when the company is balancing aggressive investment against pressure on near-term profits. The proposed transaction would give the Chinese technology giant a major new pool of capital as it seeks to expand its position in an increasingly competitive AI industry.
