HONG KONG — Alibaba is making an enormous bet on artificial intelligence, planning to raise HK$80 billion (about US$10.2 billion or S$13 billion) through a new share placement in Hong Kong as the Chinese technology giant accelerates spending on AI.
The proposed fundraising, announced on Aug. 23, would be the largest-ever primary follow-on share offering by a company already listed in Hong Kong, according to Reuters. It would also rank as the world’s third-largest primary follow-on offering so far in 2026, behind deals by Alphabet and Intel.
Alibaba said 100% of the net proceeds will be directed toward developing and expanding its “full-stack” artificial intelligence capabilities, covering everything from chips and computing infrastructure to AI models and their deployment.
Why Alibaba Is Raising Billions for AI
The move comes as Alibaba dramatically ramps up investment in AI infrastructure, even as those expenses put significant pressure on its short-term profits.
Reuters reported that Alibaba’s capital expenditure jumped 75% to 67.68 billion yuan (about US$10 billion) in the April-to-June quarter, driven largely by increased computing capacity and higher chip-related costs. At the same time, quarterly net profit plunged about 75% to 10.5 billion yuan, despite revenue increasing 9%.
Alibaba’s latest earnings show why the company is willing to accept near-term financial pressure.
Its AI Cloud and Compute Services revenue surged 45% year over year to about US$7.1 billion, according to the company’s own earnings release. Alibaba said AI-related revenue has recorded triple-digit growth for the 12th consecutive quarter, while cloud growth reached its strongest level in 22 quarters.
That suggests the company sees AI not simply as another technology investment, but as a potential long-term engine for growth.
The Bigger AI Race Behind Alibaba’s Move
Alibaba’s strategy extends across the entire AI technology stack.
That includes AI chips, data-center and cloud infrastructure, foundation models, model-as-a-service platforms and consumer and enterprise AI applications. The company has also been expanding its Qwen family of AI models and developing proprietary semiconductor technology through its T-Head business.
The timing is significant.
Chinese technology companies are competing aggressively to develop increasingly capable AI models while also building the computing infrastructure needed to train and operate them. At the same time, U.S. technology giants are committing hundreds of billions of dollars to AI-related capital expenditure.
Reuters estimates that Microsoft, Amazon, Alphabet and Meta together are expected to spend roughly US$725 billion on capital expenditure in 2026, much of it connected to AI data centers, chips and cloud infrastructure.
Alibaba is therefore entering an AI spending race where access to computing power, chips and advanced models could determine which technology companies emerge as long-term leaders.
Alibaba’s Profit Problem Is Becoming Part of the AI Story
The massive investment comes with an obvious risk: AI spending is already weighing heavily on Alibaba’s bottom line.
The Associated Press reported that Alibaba’s April-June net profit fell from 43.1 billion yuan a year earlier to 10.5 billion yuan, while capital expenditure rose sharply. Yet revenue climbed nearly 9% to about 269 billion yuan, and AI cloud and computing revenue jumped 45%.
Alibaba CEO Eddie Wu has defended the strategy, arguing that the company’s AI investments are aimed at creating long-term growth rather than maximizing short-term earnings.
The company has previously committed to investing 380 billion yuan, or roughly US$56 billion, in AI and cloud infrastructure over a three-year period. Reuters reported that Alibaba has already spent around half of that planned investment.
Investors Are Now Watching the Next Move
According to Reuters, Alibaba plans to sell 710 million ordinary shares at HK$112.70 each, representing a discount of about 3.6% to its latest closing price. Strong investor interest reportedly prompted the company to increase the size of the offering.
The deal will allow Alibaba to raise a huge amount of fresh capital without relying entirely on its existing cash reserves at a time when AI infrastructure is becoming increasingly expensive.
But issuing new shares also means dilution for existing shareholders, making the success of Alibaba’s AI strategy even more important.
The central question for investors is no longer simply how much Alibaba can spend on AI.
It is whether that spending can eventually produce enough AI, cloud and computing revenue to justify the enormous cost.
Alibaba has already shown signs of accelerating AI monetization, particularly through its cloud business. But the company’s latest earnings also demonstrate how expensive the race has become.
For Alibaba, the HK$80 billion fundraising could mark a turning point: a huge financial commitment designed to secure a bigger role in the global AI race before the window of opportunity closes.
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