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Alibaba launches $10.2B equity raise to fund more AI investment
Alibaba is issuing 710 million new shares at HK$112.70, diluting existing holders by about 3.6% even as Chairman Joseph Tsai and CEO Eddie Wu bought shares near the new issuance price.
Alibaba fell after it announced an approximately $10.2 billion equity raise to step up AI investment, with the company issuing 710 million new shares at HK$112.70, an 8.4% discount to the prior close. The deal is expected to dilute shareholders’ stakes by roughly 3.6%, which helped drive the initial negative reaction, according to Yahoo Finance.
The announcement was followed by purchases from two top executives. Chairman Joseph Tsai bought about $10.3 million of Alibaba stock, and CEO Eddie Wu bought roughly $5 million, with both purchases reported near the new shares’ issuance price.
The financing comes as Alibaba continues a multi year AI infrastructure plan of 380 billion yuan, or more than $50 billion, and the market has been focused on the near term tradeoffs. Quarterly profit fell 75% as capital spending accelerated, while cloud and AI related revenue grew 45% in the latest quarter.
Management’s view of the payback timeline may be central to how investors interpret the fundraising. Alibaba said it now expects the payback period on its AI investment could be around 2.5 years, framing the raise as an investment bet rather than purely dilution.