--- title: "Alibaba is asking shareholders for $10.2 billion to keep spending on AI" description: "The company is selling 710 million new shares at HK$112.70, a 3.6 percent discount, and putting all of it into chips, data centers and models. It reported a 75 percent fall in quarterly profit caused by the same spending." category: "Companies" category_url: https://boursel.com/category/companies author: "Daniel Okonkwo" published: 2026-08-23T13:37:15.000Z updated: 2026-08-23T13:37:15.000Z canonical: https://boursel.com/article/alibaba-is-asking-shareholders-for-10-2-billion-dollars-to-keep-spending-on-ai tags: ["alibaba", "hong kong", "ai capex", "equity issuance", "china", "dilution"] --- # Alibaba is asking shareholders for $10.2 billion to keep spending on AI The company is selling 710 million new shares at HK$112.70, a 3.6 percent discount, and putting all of it into chips, data centers and models. It reported a 75 percent fall in quarterly profit caused by the same spending. Alibaba said on Sunday it would sell [710 million new ordinary shares at HK$112.70 each](https://www.investing.com/news/stock-market-news/alibaba-proposes-hong-kong-share-placement-worth-10-billion-4872416), raising HK$80 billion, or about $10.2 billion. The price is a 3.6 percent discount to the last close. Morgan Stanley, HSBC, UBS and CICC are running the deal. All of the net proceeds are earmarked for what the company calls full-stack artificial intelligence: chips, computing infrastructure, and building and running models. It is the largest primary follow-on offering ever done by a Hong Kong-listed company, and the third largest anywhere this year. ## The sequence is the story Alibaba's second-quarter net profit [fell 75 percent from a year earlier](https://www.investing.com/news/stock-market-news/alibaba-proposes-hong-kong-share-placement-worth-10-billion-4872416), and the company attributed the drop to the AI capital spending it was doing. We covered that result when it landed, in [Alibaba's profit falls 75% as it spends its way into the AI race](/alibaba-s-profit-falls-75-as-it-spends-its-way-into-the-ai-race). Sunday's announcement is the next step in the same programme. Having reported a profit collapse caused by capital expenditure, and having already spent nearly half of a three-year capex plan, the company is going to its shareholders for money to spend more. Chief executive Eddie Wu put the logic on the record on the earnings call. "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," he said. Alibaba also says the expected payback period on its AI investments is on track to fall to 2.5 years from three. That is a company projection about its own returns, not a measured result, and it should be read as one. ## What it costs the people who already own it The dilution is smaller than the headline number suggests, and the arithmetic is worth doing because it is routinely done wrong. Alibaba's Hong Kong line trades at about HK$123 a share for a market capitalization of [roughly HK$2.13 trillion](https://stockanalysis.com/quote/hkg/9988/), which implies something on the order of 17.3 billion ordinary shares in issue. Against that base, 710 million new shares is close to 4 percent. An existing holder who does not take up any of the placement sees their stake fall by about that much. The trap here is the American listing. Alibaba's US-quoted security is a depositary receipt representing eight ordinary shares, so the share count reported against the US ticker is roughly an eighth of the real one. Divide 710 million ordinary shares by that smaller number and you get a dilution figure around 31 percent, which is wrong by a factor of about eight. The two securities are not denominated in the same unit. Four percent is not nothing. It is also a modest price for $10.2 billion, and that is precisely the advantage of being large: a company worth $270 billion can raise ten billion without meaningfully rearranging its register. ## Demand, and what it does and does not tell you The offering drew strong demand from investors including sovereign wealth funds, according to two people familiar with the deal cited by Reuters, and Alibaba increased the size after the book was oversubscribed. Those are unnamed sources describing a live deal, which is normal for a placement and is also the point at which a reader should hold the information loosely. An oversubscribed book at a 3.6 percent discount says buyers were willing to take stock at close to the market price. It does not say the capital spending will earn its return, which is a question about compute demand three years out and cannot be settled by a weekend order book. ## The wider pattern What makes this notable beyond Alibaba is the instrument. Most of the AI build has been financed with debt: US technology companies have issued [at least $220 billion this year to fund data centers, against $12.5 billion in the same stretch of 2025](/the-bond-market-has-started-charging-more-for-ai-even-to-the-safest-borrowers), and the bond market has begun charging more for it. Alibaba has gone to the equity market instead. Equity and debt fail differently, which is the part that matters for anyone holding either.