- 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.
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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.
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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.
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