# Alibaba shares tumble as investors question AI spending splurge > Source: > Published: 2026-08-24 09:50:17+00:00 Via lobehub.com # Alibaba shares tumble as investors question AI spending splurge A record share placement and a 75% profit drop have investors wondering if Alibaba's multi-billion-dollar AI bet is too much, too fast Alibaba just raised $10.2 billion to pour into artificial intelligence. The market’s response was to knock nearly 10% off the company’s stock price. Shares of Alibaba Group listed in Hong Kong plunged to approximately HK$111-112.10 after the company announced a record HK$80 billion primary share placement, the largest fundraising move in the company’s history. The 710 million new shares were priced at HK$112.70, an 8.4% discount to the prevailing market price. ## The numbers behind the nerves The share placement didn’t arrive in a vacuum. It landed just days after Alibaba reported June-quarter earnings that left investors doing a double-take. Revenue climbed 9% to RMB268.95 billion. But net profit cratered 75% year-over-year to RMB10.5 billion, roughly $1.6 billion. The culprit: capital expenditures surged 75% to RMB67.68 billion, or about $10 billion, almost entirely driven by AI infrastructure buildout. The company reported negative free cash flow of negative $6.6 billion for the quarter. US-listed ADRs had already dropped over 8% on August 22 following the earnings release. The Hong Kong share placement announcement a couple of days later added fresh selling pressure. ## The AI ambition, in context Alibaba has laid out a three-year investment plan totaling RMB380 billion, approximately $56.5 billion, earmarked for AI capabilities. There are early signs the spending is producing results. AI model-as-a-service revenue has surpassed RMB16 billion, suggesting that Alibaba’s cloud division is finding paying customers for its AI tools. The offering was nearly three times oversubscribed, meaning demand from institutional investors, reportedly including sovereign wealth funds, far exceeded the available shares. ## A familiar debate, amplified For Alibaba specifically, the scrutiny is compounded by its unique position in the Chinese tech landscape. Regulatory pressures from Beijing, geopolitical tensions affecting cross-border investment flows, and a domestic economy that’s still finding its footing all add layers of risk that American peers don’t face to the same degree. The 75% profit decline is particularly hard to look past. Spending $10 billion in a single quarter on capital expenditures while generating negative free cash flow is a strategy that leaves very little margin for error. What happens next depends largely on whether Alibaba can demonstrate accelerating AI revenue growth in coming quarters. The RMB16 billion in AI model-as-a-service revenue is a start, but it needs to scale meaningfully to justify the investment trajectory the company has charted. **Disclosure:** This article was edited by Editorial Team. For more information on how we create and review content, see our [Editorial Policy](https://cryptobriefing.com/editorial-policy/).