Alibaba shares fall 10% after announcing $10.2 billion share placement for AI
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Alibaba shares fell as much as 10% in Hong Kong on Monday following the company’s announcement of an 80 billion Hong Kong dollar ($10.20 billion) share placement. The Chinese tech giant issued 710 million new shares at HK$112.70 each to non-U.S. investors, with the net proceeds earmarked for expanding and enhancing its full-stack AI infrastructure. This move occurred shortly after the firm reported a 75% drop in June-quarter profit, driven by a 75% increase in capital expenditure to 67.7 billion yuan.
Consequences
The company’s focus on AI investment is expected to result in continued near-term pressure on profits due to sustained high capital expenditure. Alibaba and its domestic peers, such as Tencent, remain committed to heavy spending on computing infrastructure to facilitate the growth and monetization of their AI models.
Sources
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