Alibaba Shares Slide After $10.2 Billion AI Share Sale

Alibaba shares fell sharply in Hong Kong on Monday after the Chinese technology giant launched a $10.2 billion share sale to fund its expanding AI ambitions. The company priced 710 million new shares at HK$112.70 each, an 8.4% discount to Friday’s closing price, raising concerns over shareholder dilution and the risks involved in its heavy AI spending.

Despite the discount, the offering attracted strong investor demand, with orders reportedly reaching $28 billion. Around 40% of the shares are expected to go to long-term and sovereign investors. Alibaba Chairman Joe Tsai and CEO Eddie Wu also bought shares in the company, signaling confidence in its AI strategy.

Alibaba is increasingly shifting its focus toward AI as e-commerce growth slows. The company has committed nearly half of its 380 billion yuan three-year capital spending plan, while its AI-related spending contributed to a 75% year-on-year drop in quarterly net profit. The company expects its AI investments to break even within about three years as it develops proprietary chips and AI models.

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