Alibaba Group Holding Limited (NYSE:BABA) stock slid by almost 4% during Monday premarket trading. Nasdaq futures are down 0.75% while S&P 500 futures have shed 0.22%.
The Chinese e-commerce juggernaut is using a record Hong Kong share sale to fund its full-stack AI strategy, signaling that the company is willing to accept near-term dilution and heavier spending as it tries to strengthen its position in cloud computing and artificial intelligence.
Alibaba Raises Fresh Capital for AI
Alibaba raised 80 billion Hong Kong dollars, or about $10.2 billion, by selling 710 million new shares at 112.70 Hong Kong dollars each. The company plans to invest all net proceeds in its full-stack AI capabilities, including expanding and upgrading AI infrastructure, Bloomberg reported on Sunday.
The placement comes as Alibaba ramps capital spending and pursues its previously announced plan to invest at least 380 billion Chinese yuan in cloud computing and AI infrastructure over three years. Its June-quarter capital expenditure increased 75% to 67.7 billion Chinese yuan, while profit fell 75%.
