Alibaba to Raise $10.20 Billion for AI Investment With Share Placement — Update

By Fabiana Negrin Ochoa and Tracy Qu

Alibaba plans to raise $10.2 billion to invest in artificial intelligence, a move that could sharpen its edge in the field but which has stoked fears of share dilution, sending its stock sharply lower.

The Chinese tech heavyweight said Sunday that it reached an agreement to place 710 million new shares to investors outside the U.S. at 112.70 Hong Kong dollars each. That represented a sharp discount to the stock's close on Friday at HK$123.00.

Assuming all shares are placed, the gross proceeds will be HK$80.0 billion, equivalent to US$10.2 billion, which Alibaba said it will use exclusively to invest in its AI capabilities.

The book was closed within hours, with total demand ultimately reaching US$28 billion, including nearly US$6 billion from sovereign wealth funds and long-only investors, according to a source familiar with the matter.

The offering was nearly three times oversubscribed, and sovereign and long-only funds ultimately received more than 40% of the allocation, the person said.

Shares of the company fell as much as 10% in early Hong Kong trade, dropping in line with other tech names. The Hang Seng Tech Index was last down 3.9%.

The Hangzhou-based company has been spending heavily on technology as it jostles with rivals for dominance in the rapidly growing AI sector.

That has come at a cost. Alibaba's earnings last week showed that net profit fell 76% in its fiscal first quarter as continued investments in AI infrastructure pushed capital expenditure sharply higher.

"The placement may initially weigh on sentiment given the immediate dilution," BofA Securities said in a research note. However, the bank remains optimistic, citing company's strong guidance for its cloud business, improving AI investment economics and sequential free-cash-flow recovery.

"We view the transaction as a mix of growth financing, funding diversification, and pre-emptive balance-sheet strengthening," BofA said.

Alibaba said it plans to use all of the placement proceeds for investments in its AI capabilities, including infrastructure.

The shares placed represent about 3.70% of the amount issued when the agreement was reached. The placement is expected to close Wednesday.

CICC, HSBC, Morgan Stanley and UBS are among the banks managing the placement.

Alibaba is competing in a market where Chinese companies are rolling out ever more sophisticated AI models at an increasingly rapid pace. The company has continued to upgrade its flagship Qwen series and integrate it into its core ecosystem, and recently rolled out the Qwen3.8-Max--one of the world's largest open-source models.

Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com and Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

August 24, 2026 00:06 ET (04:06 GMT)