Alibaba (BABA) Launches Record $10B Share Sale to Fund AI Race

Record $10B Follow-On for AI

Alibaba Group Holding (BABA) has announced a primary share sale designed to raise roughly $10 billion, with 100% of net proceeds dedicated to full-stack AI capabilities spanning chips, infrastructure, and model development. The e-commerce and cloud giant is offering 710 million ordinary shares at HK$112.70 each, a 3.6% discount to Friday's closing price. According to sources familiar with the deal, this marks an all-time high for primary follow-on offerings among Hong Kong-listed companies. Globally, only Alphabet's $80 billion raise in June and Intel's $15 billion sale in August outsize this transaction among primary follow-ons this year. The company will face a 90-day lockup period. The offering has attracted strong investor interest, including from sovereign wealth funds, with demand reportedly exceeding the initial size, prompting Alibaba to increase the offering. Morgan Stanley, HSBC, UBS, and CICC are serving as joint bookrunners. The capital injection comes as Alibaba's AI buildout has intensified, with quarterly capital spending climbing to nearly $10 billion and the company already deploying about half of its three-year capex plan. The placement is subject to market conditions, with the company noting that final completion is not guaranteed.

AI Spend Squeezes Profit, Cash

The fundraise lands as AI outlays strain Alibaba's financials. For the June quarter, net profit plunged 75% to 10.5 billion yuan (about $1.6 billion), while free cash flow turned negative at $6.6 billion in outflows. The company nonetheless expects the payback period for AI investments to shorten from three years to 2.5 years, citing surging demand. Chief Executive Eddie Wu has been pruning non-core assets to fund the pivot, most recently selling gaming unit Lingxi Games to Trustar Capital in a deal worth at least $1.5 billion. The equity raise therefore shifts funding from operational cash flow to shareholder capital, a structural change that analysts say could dilute existing holders. The offering's strong take-up from institutional buyers, including sovereign funds, suggests the market is willing to absorb near-term dilution in exchange for a larger AI footprint. According to people familiar with the transaction, the final allocation may exceed the initial size given demand. Meanwhile, the company's flagship Qwen family has become the world's most popular model lineup this year, according to Bloomberg, underscoring the competitive stakes in the AI race.

NVIDIA Servers to Jump 15%

Beyond Alibaba, the AI infrastructure cycle is hitting hardware costs. NVIDIA has informed some large customers that servers powered by its AI chips, including Vera Rubin and Grace Blackwell systems, will be priced more than 15% higher from early 2027, according to a Bloomberg report. The increase is driven primarily by rising memory chip costs and will affect data-center operators such as Microsoft, Google, and Oracle. NVIDIA has not publicly commented. The company is scheduled to report quarterly earnings on August 26, when investors will gauge its response to cost inflation. The price adjustment comes as memory suppliers—including Micron, SK Hynix, and Samsung—have raised quotes, passing through to server OEMs. If hyperscalers absorb the higher prices without cutting orders, it signals that AI capital expenditure remains resilient despite increased financing costs. Otherwise, the cycle could cool, affecting equipment makers. Separately, Brazil's government committed about $444 million to expand national AI compute, including $251 million for a Rio de Janeiro supercomputer developed with Huawei and iFlytek, and $193 million for a tender in Rio Grande do Norte.

Equity Pivot Tests AI CapEx

The common thread across these developments is an AI infrastructure buildout increasingly funded by external capital rather than operating cash flow. Alibaba's equity raise, NVIDIA's pricing power on memory costs, and sovereign AI investments all point to a capex cycle that shows no signs of cooling. For crypto investors, the same dynamic has historically correlated with interest in AI-linked altcoins, which have tracked infrastructure spending. Analysts highlight that the sustainability of this cycle hinges on whether hyperscalers continue to absorb higher server prices and whether newly funded projects convert into meaningful GPU orders. The official disclosure from Alibaba does not specify a valuation for the offering, and the final allocation remains subject to market conditions.