Global Market: Alibaba shares slide after $10.2 billion share placement to fund AI expansion

Hong Kong-listed shares of Alibaba fell sharply on Monday after the Chinese e-commerce and cloud computing giant launched a $10.2 billion share placement to fund its artificial intelligence expansion, raising concerns among investors over the returns from its heavy AI spending, as per a Reuters report.

Alibaba said on Sunday that its HK$80 billion ($10.21 billion) share placement had been finalised at HK$112.70 per share, representing an 8.4% discount to Friday’s closing price. The company plans to use the proceeds to support AI-related development and infrastructure as it steps up investments amid intensifying competition and ongoing Sino-U.S. technology tensions.

Alibaba shares fell as much as 10% to HK$110.10 in early Hong Kong trading.


The placement is the largest-ever primary follow-on offering by a Hong Kong-listed company and the third-largest globally this year, behind offerings by Alphabet and Intel.

Investor concerns over dilution and the scale of Alibaba’s capital expenditure have added to broader market questions about when huge investments in AI infrastructure will begin generating meaningful returns. Reuters reported that investors have increasingly raised similar concerns in the United States as technology companies continue to commit billions of dollars to AI development.

The share sale comes a week after Alibaba reported its quarterly results and said it had already deployed nearly half of its three-year capital expenditure plan. The company also brought forward its expected payback period on AI investments to two and a half years from three years, citing strong demand for AI services.

Despite the expected acceleration in demand, Alibaba’s quarterly net profit plunged 75% from a year earlier, primarily due to higher AI-related spending.

Alibaba is also expanding its AI infrastructure overseas. Last week, its digital technology and AI division, Alibaba Cloud, opened its third data centre in South Korea, taking its network to 104 availability zones across 30 regions.

The expansion forms part of Alibaba’s broader AI infrastructure investment plan announced in October, under which the company intends to invest 380 billion yuan ($56.54 billion) over three years.

The latest share placement underscores Alibaba’s determination to strengthen its position in the rapidly expanding AI market, even as investors remain focused on the pace at which those investments can translate into sustainable earnings growth.