China's e-commerce and cloud giant Alibaba Group has announced a record-breaking share placement in Hong Kong to aggressively bankroll its artificial intelligence infrastructure.

Alibaba has officially announced a massive primary follow-on share offering on the Hong Kong Stock Exchange targeting approximately HK$80 billion ($10.2 billion / roughly $13 billion SGD).

The deal stands as the largest-ever primary follow-on offering by a Hong Kong-listed company and ranks as the third-largest globally this year, trailing only Alphabet and Intel.

According to company disclosures, Alibaba intends to allocate 100% of the net proceeds from the placement directly toward its "full stack" artificial intelligence capabilities. 

This includes heavy investments in Custom semiconductor chips, Core cloud infrastructure and data center and The development, training, and deployment of proprietary AI models.

CEO Eddie Wu defended the aggressive spending strategy, noting that the company has already burned through nearly half of its three-year capex investment plan.

The move comes after Alibaba's fiscal quarter results, which revealed a 75% plunge in net profit driven by a massive spike in capital expenditures (roughly RMB 67.7 billion / $9.5 billion). 

Last week, Alibaba reported its results for the April-to-June quarter, saying it had already spent nearly half of its three-year capex investment plan. It said its expected payback on AI-related investments was on track to fall to 2.5 years from 3 years, driven by surging demand.

"In order to be able to capture that future growth, we first need to make these capex investments to build out the necessary compute capacity," CEO Eddie Wu said on an earnings call.

The term sheet outlined the sale of 710 million ordinary shares at HK$112.70 each, reflecting a 3.6% discount to its previous closing price.

Driven by strong interest from institutional players and sovereign wealth funds, the offering was heavily oversubscribed, allowing Alibaba to increase the scale of the transaction.

Major financial institutions managing the record placement include Morgan Stanley, HSBC, UBS, and CICC.

The landmark fundraising effort highlights the staggering capital required for tech giants to keep pace in the global AI infrastructure race, balancing near-term profit sacrifices for long-term dominance.

Alibaba's net profit for the quarter fell 75% from a year earlier as it ramped up its AI-related capital expenditures.

The company's share offering has been met with strong demand from investors, including sovereign wealth funds.

Since 2022, the global AI boom has fueled staggering capital outlays on infrastructure and data centers, including in the U.S. and China.

The four major U.S. hyperscalers including Microsoft, Amazon, Alphabet and Meta together are expected to spend roughly $725 billion in capital expenditures in 2026, much of it tied to AI data centers, chips and cloud infrastructure.

As reported by Reuters, Alibaba increased the size of the offering after the deal was oversubscribed and Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners of the latest offering.

However, the company informed that share placement was not registered under U.S. securities laws as an offshore transaction, meaning American investors were not eligible to participate.