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Alibaba to raise US$10.2 billion via new share issuance for AI push
The company will invest all proceeds to expand its AI infrastructure and said it expects AI computing investments to break even within about three years, potentially around two as gross margins rise.
Alibaba Group Holding will issue new shares worth HK$80 billion, or US$10.2 billion, and plans to use all proceeds to invest in artificial intelligence, including expanding and enhancing its AI infrastructure, the company said on Sunday, aiming to extend its global AI leadership.
The decision highlights Alibaba’s shift from an e-commerce business to a full-stack AI player spanning chips, computing infrastructure, large language models, and AI applications.
Banks received pre-launch indications of interest above the deal size, supported by demand from sovereign wealth funds and global long-only investors, according to a person familiar with the matter, and Alibaba increased the offering size to HK$80 billion due to strong investor appetite.
In recent results, Alibaba reported a 45.0% year-over-year jump in April-to-June quarterly revenue in its cloud and AI businesses, and it said capital expenditure rose 75.0% year over year to 67.7 billion yuan, or about US$10 billion. During an earnings call on Thursday, CEO Eddie Wu Yongming said Alibaba expected its AI computing investments to break even within three years, with the payback period potentially shortened to about two years as gross margins continued to rise, SCMP Economy reported.