Alibaba is raising HK$80 billion ($10.2 billion) through a share placement to accelerate investment in artificial intelligence, giving the Chinese technology giant one of the largest funding war chests for AI infrastructure outside the United States.
The offering, launched Sunday, would be the largest primary follow-on share sale ever by a company listed in Hong Kong and the world’s third-largest primary follow-on offering this year, behind transactions by Alphabet and Intel.
Alibaba said it will use all net proceeds to develop its “full stack” AI capabilities, spanning chips, computing infrastructure, AI models, and their deployment.
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The scale of the fundraising indicates that the economics of the AI race are quickly moving from software development toward enormous infrastructure requirements. The priority for Alibaba is building enough computing capacity to meet demand for its AI services while expanding its ability to develop models and the hardware and infrastructure needed to run them.
A term sheet reviewed by Reuters showed Alibaba plans to sell 710 million ordinary shares at HK$112.70 each, representing a 3.6% discount to its latest closing price. The company did not provide a detailed breakdown of how the new capital would be divided among chips, data centers, computing capacity and model development.
The fundraising comes only days after Alibaba disclosed the financial cost of its AI push. The company said last week that it had already spent almost half of its three-year capital expenditure plan. It also said the expected payback period for its AI investments was improving to about 2.5 years from three years, driven by stronger-than-expected demand.
That improvement is central to Alibaba’s decision to accelerate spending.
The company reported a 75% decline in quarterly net profit from a year earlier as it increased capital expenditure related to AI. The deterioration in earnings highlights the immediate financial trade-off facing technology companies investing heavily in the sector: large amounts of cash must be committed today to build computing infrastructure in anticipation of future demand and revenue.
Alibaba CEO Eddie Wu said the investment was necessary to capture that growth.
“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,” Wu said on an earnings call.
The new share sale gives Alibaba additional funding without relying entirely on operating cash flow or increasing debt to finance its AI expansion. It also provides a significant indication of how investors view the company’s AI strategy. The offering attracted strong demand, including from sovereign wealth funds, according to people familiar with the transaction.
The deal was reportedly oversubscribed, prompting Alibaba to increase its size.
Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners, according to people familiar with the offering.
The shares are being sold offshore and are not registered under U.S. securities laws, meaning American investors were not eligible to participate.
Alibaba’s decision to raise such a large amount of capital comes as the global AI infrastructure race enters a period of extraordinary spending.
Since the launch of ChatGPT in late 2022, technology companies have committed enormous sums to data centers, advanced processors, networking equipment and power infrastructure needed to train and operate increasingly sophisticated AI systems.
The spending is intense among the largest U.S. cloud companies. Microsoft, Amazon, Alphabet and Meta are expected to spend roughly $725 billion on capital expenditure in 2026, much of it related to AI data centers, chips and cloud infrastructure.
Alibaba is attempting to build a comparable strategic position in China’s AI ecosystem, although the two markets operate under very different technological and geopolitical constraints.
China’s access to the most advanced AI chips is restricted by U.S. export controls, forcing Chinese technology companies to place greater emphasis on domestic semiconductor development, alternative computing architectures and optimization of AI models to work with available hardware.
That makes Alibaba’s “full stack” strategy particularly significant. Rather than simply purchasing computing capacity from suppliers, the company is investing across several layers of the AI technology stack. Its ambitions include chips and infrastructure as well as the models that ultimately run on that infrastructure.
The strategy could give Alibaba greater control over costs and supply at a time when access to advanced computing hardware has become a strategic issue. It could also allow the company to integrate its AI models more closely with its cloud business. Alibaba Cloud is already one of China’s major cloud-computing providers, giving the company a distribution channel through which it can sell AI computing, models and applications to businesses.
The fundraising therefore has implications beyond Alibaba’s traditional e-commerce operations.
For years, Alibaba was primarily associated with online retail and digital commerce. Its cloud division has become increasingly important, while AI is now emerging as a central pillar of its long-term growth strategy.
The shift is also visible in the company’s capital allocation.
A 75% decline in quarterly profit shows that the AI expansion is placing significant pressure on near-term earnings. Investors are effectively being asked to accept lower profitability today in exchange for a larger position in what Alibaba believes will become a much bigger AI market.
The improving expected payback period provides some justification for that approach. If Alibaba can recover AI infrastructure investments in roughly 2.5 years, the company could potentially reinvest cash flows into additional capacity and create a self-reinforcing expansion cycle.
But that assumption depends heavily on demand continuing to grow.
According to industry analysts, the biggest risk for Alibaba and other AI infrastructure investors is that capital expenditure accelerates faster than monetization. If companies build too much computing capacity before AI applications generate enough revenue, returns on those investments could deteriorate.
The current global spending boom is already raising questions about how quickly AI infrastructure will translate into sustainable earnings. Alibaba’s decision to raise $10.2 billion nonetheless is seen as an indication that the company believes demand is strong enough to justify accelerating rather than slowing its investment.