Alibaba Group shares fell sharply after the Chinese e-commerce giant priced a record $10 billion share sale in Hong Kong, an offering designed to fund its artificial intelligence expansion. The company’s American Depositary Receipts dropped 8.6% on Friday, while its Hong Kong-listed shares are down 13.9% for the year so far.
The Hangzhou-based company said on Sunday it priced the offering at HK$112.70 per share, a discount to Friday’s Hong Kong closing price of HK$123. The deal is expected to raise about HK$80 billion ($10.2 billion), making it the largest follow-on offering by a company in Hong Kong’s history. Alibaba plans to use the proceeds to finance investments in AI infrastructure and cloud computing, areas where it faces intense competition from domestic rivals such as Tencent and Baidu, as well as global players like Microsoft and Amazon.
The share sale comes at a turbulent time for Alibaba’s investors. The company reported a 75% profit decline for the quarter ended in June, as it ramped up capital spending on AI-related projects. That spending spree has spooked the market, raising questions about when the heavy investment will translate into returns. The stock’s decline on Friday extended a difficult year for shareholders, with the ADRs down 18.6% in 2026.
Michael Burry, the Scion Capital Management founder known for his bets against the US housing market before the 2008 financial crisis, said he has sold his position in Alibaba, calling the shares overvalued. In a post on Substack, Burry said he planned to move most of his capital into, a rival online retailer, and that Alibaba’s share price would need to fall by half before he would consider re-entering. “I cannot bless share issuances,” he wrote, adding that he expects the company’s return on invested capital to continue declining.
Burry’s criticism is notable given that he had disclosed building a new position in Alibaba as recently as April. His reversal highlights growing unease among some investors about the company’s strategy of heavy spending on AI at a time when its core e-commerce business faces slowing growth and increased competition. The discount pricing of the Hong Kong offering, which was set below the prevailing market price, also signals that demand from institutional investors may not have been as strong as the company hoped.
The offering is a test of investor appetite for Chinese technology stocks, which have struggled in recent years amid regulatory crackdowns, geopolitical tensions, and a sluggish domestic economy. Hong Kong has sought to position itself as a hub for large capital raises, and Alibaba’s deal is a significant win for the city’s stock exchange. However, the market reaction suggests that even a record-breaking sale cannot shield the company from broader concerns about its growth prospects and the returns on its AI investments.
Alibaba’s management has defended the spending, arguing that AI is a strategic priority and that the company must invest aggressively to remain competitive. The funds raised from the Hong Kong offering will bolster its balance sheet as it pursues that goal. For now, though, investors are voting with their feet, and the stock’s decline reflects the uncertainty surrounding the company’s ability to turn its ambitious AI plans into sustainable profits.