Alibaba shares came under heavy pressure on Monday after the Chinese technology giant announced an $10.2 billion share placement to raise funds for its growing artificial intelligence ambitions. The company plans to issue 710 million new shares to non-U.S. investors at HK$112.70 each, a discount to its previous closing price of HK$123. The announcement sent Alibaba shares down as much as 10% in Hong Kong before they settled around 8.4% lower.
Alibaba said the entire net proceeds from the fundraising will be directed toward strengthening its AI capabilities, particularly the expansion of its AI infrastructure. The move highlights how aggressively the company is positioning artificial intelligence as a major source of future growth, even as investors remain concerned about the financial cost of that strategy.
The timing of the fundraising has also raised eyebrows. It comes only days after Alibaba reported a 75% decline in quarterly profit, with increased AI investment weighing heavily on its financial performance. The company’s capital expenditure surged 75% to 67.7 billion yuan during the June quarter, showing just how much it is spending to build the computing power and infrastructure needed to compete in the rapidly expanding AI market.
Despite the short-term pressure on profits, Alibaba appears determined to stay ahead in the AI race. The company previously announced plans to invest at least 380 billion yuan in cloud computing and AI infrastructure over three years. Its strategy is built around leveraging its cloud business and AI models to capture new opportunities as businesses and consumers increasingly adopt AI-powered services.
Alibaba is not alone in making major AI investments. Other Chinese technology giants, including Tencent, are also increasing spending on computing infrastructure as they look to turn their AI models into profitable businesses. While Alibaba’s latest share sale could put further pressure on existing shareholders in the near term, the company is betting that heavy investment today will give it a stronger position in the AI-driven economy of tomorrow.
source: cnbc
