Alibaba Group’s shares declined after the company announced a $10.2 billion secondary share offering in Hong Kong to fund investments in artificial intelligence, including chips, infrastructure and AI models.
The offering, priced at an 8.4% discount to Friday’s closing price, initially drove the stock down more than 10% before paring losses to trade near HKD 112.50. The discount helped stabilize the decline, aligning the drop with the offer’s terms.
The transaction generated strong demand, attracting orders totaling $28 billion, including $6 billion from long-term and sovereign investors such as the Qatar Investment Authority and Norway’s sovereign wealth fund. It ranks as the largest secondary offering ever by a company listed in Hong Kong and the third-largest globally this year, trailing Alphabet’s nearly $85 billion sale and Intel’s $20 billion issue.
The capital raise follows Alibaba’s latest quarterly earnings, which reported a 75% year-over-year drop in net profit, attributed primarily to investments in AI initiatives. The company also announced plans to separate its AI unit, led by CEO Eddie Wu.
Analysts noted the offering underscores broader strategic moves among major technology firms. Winston Ma, adjunct professor at NYU Law School and former North America director for China Investment Corp., said Alibaba’s fundraising alongside concurrent operations by Alphabet and Intel reflects a shared strategic approach among U.S. and Chinese tech giants.
Yang Tingwu, vice general manager at asset manager Tongheng Investment, cautioned that Alibaba’s core strength remains e-commerce, adding that heavy AI hardware investments may not guarantee leadership in technological innovation.
Alibaba’s chip-manufacturing unit, T-Head, is also preparing for an initial public offering as part of the company’s broader AI expansion strategy.
