- Alibaba plans to raise $10.2 billion via a new share placement in Hong Kong
- Funds will strengthen Alibaba's full-stack AI capabilities and infrastructure
- Alibaba issued 710 million new shares at a 3.6% discount to the last close
Alibaba is turning to investors for fresh capital as the Chinese technology giant accelerates its push to become a global leader in artificial intelligence.
The company plans to raise about HK$80 billion, or $10.2 billion, through a new share placement in Hong Kong.
Also Read | Apple Shifts China Strategy, Teams Up With Alibaba To Train Own AI Models: Report
According to AFP, Alibaba said the entire net proceeds would be used to strengthen its full-stack AI capabilities and related infrastructure.
Under the deal, Alibaba plans to issue 710 million new shares at HK$112.70 apiece. The price represents a 3.6% discount to the previous closing price. The shares will be offered to non-US investors, subject to the terms of the placement.
The fundraising comes as Alibaba sharply increases its AI spending. Its capital expenditure reached 67.7 billion yuan, or about $10 billion, in the June quarter, up 75% from a year earlier. Much of that spending is being directed towards AI infrastructure and computing capacity.
That investment is already putting pressure on earnings. Alibaba's net profit plunged about 75% year-on-year in the June quarter to 10.5 billion yuan, while free cash flow turned negative by $6.6 billion.
At the same time, revenue from AI cloud and computing services jumped 45% to $7.1 billion.
Also Read | Alibaba Sues The US, Seeking Removal From Pentagon's Blacklist
Alibaba has committed 380 billion yuan, or roughly $56.4 billion, to AI and cloud infrastructure over the next three years. Chief Executive Eddie Wu has said the company expects its AI investments to reach break-even within three years based on current margins.
The latest share sale underlines how aggressively Alibaba is funding its transformation from an e-commerce company into a full-stack AI player. The company is investing heavily in AI infrastructure and cloud computing as competition intensifies across China's technology sector.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
