● Covered by 1 source · 1 reportMedium impact1 negative
Alibaba shares drop 10% after $10.2 billion share placement to fund AI development
Key points
- Alibaba priced an 80 billion Hong Kong dollar ($10.2 billion) share placement.
- Proceeds will fund full-stack AI capabilities and infrastructure expansion.
- Shares dropped 10% in Hong Kong after the announcement.
- The company reported a 75% profit drop in the June-quarter due to AI spending.
Share Placement and Market Reaction
Alibaba announced an 80 billion Hong Kong dollar ($10.2 billion) placement of newly issued shares to non-U.S. investors. The company will issue 710 million new shares at HK$112.70 each. Following this announcement, Alibaba's shares plunged by as much as 10% in Hong Kong.
The share placement is expected to close on Wednesday. Shares were last trading 8.4% lower at HK$112.7, compared to Friday's closing price of HK$123.
Investment in AI Capabilities
Alibaba stated that all net proceeds from the share placement will be used to invest in its full-stack AI capabilities. This includes expanding and enhancing its AI infrastructure. The company has been increasing its investment in AI, aiming to make it a primary driver for future growth.
Financial Context and AI Spending
This share placement occurs shortly after Alibaba reported a 75% decline in profit for the June-quarter. Heavy AI spending contributed to this result, with capital expenditure increasing by 75% to 67.7 billion yuan. Alibaba previously announced plans to invest at least 380 billion yuan in cloud computing and AI infrastructure over three years.
Other Chinese tech companies, such as Tencent, are also increasing AI spending, with Tencent's capital expenditure rising 65% from the previous quarter to 52.8 billion yuan for AI model monetization.
✨ This summary was generated by AI from the outlets' reporting listed below. It is not independently verified and may contain errors — check the original sources. How BrevFeed works →
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Reporting from
Alibaba's shares fell by 10% in Hong Kong following the announcement of an $10.2 billion share placement aimed at funding its AI capabilities and infrastructure. This move comes after the company reported a 75% drop in quarterly profit due to significant AI spending.