Alibaba shares fall 8% after $10 billion Hong Kong share sale

Alibaba's stock price declined 8% in early Hong Kong trading on Monday following the finalization of an $10.21 billion share placement. The tech giant priced 710 million new shares at an 8.4% discount to its last closing price.

This transaction marks the largest primary follow-on offering by a Hong Kong-listed company and ranks as the third-largest globally this year. Alibaba plans to allocate the funds towards artificial intelligence development and the expansion of related infrastructure.

The share placement occurs shortly after Alibaba reported a 75% drop in quarterly net profit, largely attributed to AI-related expenditures. The company has accelerated its projected payback period for AI investments to two and a half years, citing surging demand for AI services. This move follows the recent launch of Alibaba Cloud's third data center in South Korea, part of a broader pledge to invest $56.54 billion over three years in AI infrastructure.