Alibaba shares slide after US$10.2 billion AI share sale offered at sharp discount

Alibaba's Hong Kong shares fell 9.8% to HK$111.00 on Monday after the company launched a US$10.2 billion share sale at HK$112.70 per share, an 8.4% discount to Friday's close, to fund AI development. The offering, the largest-ever primary follow-on by a Hong Kong-listed company, drew orders totaling US$28 billion, with about 40% allocated to long-only and sovereign investors. Alibaba's stock slide reflects investor concerns over dilution and execution risks, despite strong demand from global sovereign funds.

Alibaba shares slide after US$10.2 billion AI share sale offered at sharp discount The firm’s share sale is the largest-ever primary follow-on offering by a Hong Kong-listed company SHANGHAI China’s Alibaba shares slumped in Monday Aug 24 Hong Kong trade after it launched a US$10.2 billion share sale https://www.businesstimes.com.sg/companies-markets/alibaba-raises-us10-billion-record-hong-kong-share-sale at a sharp discount to fund its AI ambitions, with investors focused on stock dilution and execution risks. The e-commerce and cloud computing giant said it would be offering HK$80 billion US$10.2 billion in new shares at HK$112.70 apiece – an 8.4 per cent discount to its Friday close – to fund development of chips, AI infrastructure and models. Its Hong Kong shares were ended morning trade down 9.8 per cent at HK$111.00. “Alibaba’s DNA is in e-commerce, not advanced tech,” said Yang Tingwu, vice-general manager of asset manager Tongheng Investment. “No matter how much it invests in AI hardware, it will likely be outmanoeuvered by competitors in tech innovation.” The offering has, nevertheless, seen strong demand, receiving orders totalling US$28 billion with US$6 billion from long-only and sovereign investors, according to three sources with knowledge of the funding who declined to be identified as the details were confidential. About 40 per cent of the book will be allocated to long-only and sovereign investors, two sources said. Investors include major sovereign wealth funds in Europe, Asia and the Middle East, the sources added. Alibaba did not immediately respond to a request for comment. The deal is the largest-ever primary follow-on offering by a Hong Kong-listed company and the third-largest globally in 2026 after offerings of nearly US$85 billion from Alphabet https://www.businesstimes.com.sg/companies-markets/telcos-media-tech/alphabet-plans-raise-us80-billion-ai-goals-berkshire-invest-us10-billion and US$20 billion from Intel. “Alibaba’s placement – landing alongside massive capital raises by Alphabet and Intel in the US – proves that American and Chinese tech giants are operating off the exact same strategic playbook,” said Winston Ma, an adjunct professor at NYU School of Law and former head of North America for sovereign wealth fund China Investment Corp. “The global sovereign investors aren’t blind to US-China tech friction https://www.businesstimes.com.sg/opinion-features/us-and-chinas-ai-race-will-define-century – they are compartmentalising it,” Ma said, adding that they were more comfortable with compliance issues when investing in Chinese commercial cloud and open-weight AI plays over restricted semiconductor hardware. The biggest Chinese AI names are, however, investing only a fraction of what their US counterparts are doing. Capital Group, one of the world’s largest active investment managers, estimates that AI-related capital expenditure by the biggest US hyperscalers – Microsoft, Amazon, Alphabet, Meta and Oracle – reached US$791 billion as of Jul 31. That compares with US$118 billion for China’s ByteDance, Alibaba, Tencent and Baidu. While Chinese firms have been on the back foot compared to US rivals, particularly due to years of US restrictions on access to the most advanced Nvidia chips, those constraints have pushed them to develop more efficient models and infrastructure that require less computing power and capital. The share placement comes a week after Alibaba reported quarterly net profit that fell 75 per cent from a year earlier due primarily to AI-related spending. https://www.businesstimes.com.sg/companies-markets/telcos-media-tech/alibabas-revenue-climbs-9-testament-chinas-ai-boom It said it had committed nearly half of its three-year capital expenditure of 380 billion yuan $56.5 billion and brought forward its projected payback on AI investment to two and a half years from three due to surging demand for AI services. REUTERS Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free. Share with us your feedback on BT's products and services TRENDING NOW /pulse?ref=trending-now National Day Rally: 8 things to know, from more childcare leave to higher BTO income ceiling How BYD disrupted Singapore’s car market – and why the strategy is turning on itself NDR 2026: Every Singaporean child to get direct financial support from birth to age 17 When every phone becomes a satellite phone, what happens to Asia’s telcos?