Alibaba raised approximately HKD 80 billion (about USD 10.2 billion) through a follow-on offering on August 23, selling 710 million new shares at HKD 112.7 each, an 8.4% discount to the prior Hong Kong close on August 21 [1, 2, 3]. The offering was oversubscribed nearly three times with more than HKD 200 billion in orders and over 40% of shares allocated to sovereign and long-term funds [2, 4]. It became the largest follow-on offering in Hong Kong’s history and the third largest globally this year [1, 2, 5].

Alibaba plans to invest the entire proceeds into expanding its full-stack AI capabilities, including chips, data centers, and large language models as part of its AI strategy [1, 3, 6]. Its Qwen large language model series has exceeded 3 billion downloads globally, reflecting strong AI demand [1, 3]. CEO Eddie Wu said the company is "in a superior position to capture AI demand and expect AI investments to break even in around two to three years with improving margins" [3]. Alibaba committed to investing RMB 380 billion over three years in AI-related fields [1, 6].

However, Alibaba’s Q2 2026 net profit sank about 75% year-over-year, due mainly to a 75% rise in capital expenditure on AI infrastructure and cloud computing, reaching nearly USD 10 billion [7, 2, 6]. The heavy AI investment weighs on profit margins and pressures its core e-commerce business amid weak domestic consumption in China [1, 7, 6].

Alibaba’s share placement caused dilution concerns with a 3.7% increase in total shares outstanding [1, 7, 6]. On August 24, Hong Kong shares opened down over 8%, falling below the placement price [1, 5]. The Hang Seng Index fell 492 points (1.89%) that day, partly linked to market unease around the sale [8, 9]. Short selling surged on Alibaba stock, with HKD 9.44 billion shorted, reaching a 34% intra-day short sale ratio [7].

Famous investor Michael Burry publicly sold all his Alibaba shares, switching to rival JD.com. He criticized Alibaba’s capital allocation on AI and said, "Alibaba stock has to fall by half before I’m interested again" [1, 7]. Some market participants caution Alibaba’s roots are in e-commerce, not frontier technology, warning it may be outpaced by competitors despite large AI investments [10].

Alibaba expects to complete the share placement transaction by August 26, 2026 [7, 6].