Alibaba is selling $10.2 billion of new shares, and every cent of it goes to AI

Alibaba announced on 23 August that it will raise HK$80 billion, about 10.2 billion dollars, by placing 710 million new ordinary shares in Hong Kong at HK$112.70 each — a 3.6 percent discount to the last close. It is the largest primary follow-on offering ever done by a Hong Kong-listed company, and the third largest anywhere this year after Alphabet and Intel. The company says one hundred percent of the net proceeds go to its "full stack" AI effort: semiconductors, computing infrastructure, and the building and running of models. Morgan Stanley, HSBC, UBS and CICC are managing the placement, and Reuters reports demand ran ahead of the original size, with sovereign wealth funds among the buyers, which is why the deal was enlarged. The context is the part worth holding onto. Alibaba's quarterly capital spending is now approaching 10 billion dollars, it has already spent close to half of its three-year capex programme, and its net profit in the most recent quarter fell 75 percent year on year. Management says it now expects AI investments to pay for themselves in about two and a half years rather than three.

✓ Verified · 3 sources

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