Alibaba founder Jack Ma, along with Chairman Joe Tsai and CEO Eddie Wu, collectively bought over $100 million worth of Alibaba shares in a show of confidence in the company's artificial intelligence strategy. Ma's personal investment amounted to more than HK$600 million (approximately $76.5 million), while Tsai and Wu acquired at least $20 million in shares. These purchases followed Alibaba's announcement of a $10.2 billion share sale at a discounted price, intended to fund its significant investments in AI infrastructure, chips, and model development.
The $10.2 billion share placement, which involved selling 710 million new ordinary shares at HK$112.70 each (an 8.4% discount to the previous Friday's close), caused Alibaba's shares to slide by as much as 10.5% initially. This discount and the potential for dilution concerned investors, despite strong demand for the offering, which drew $28 billion in orders. The sale is the largest-ever follow-on offering by a Hong Kong-listed company and aims to support Alibaba's goal of leading in global AI.
Alibaba has made AI a central priority, with its Qwen AI models gaining popularity in China. The company's recent quarterly net profit fell 75% year-over-year, largely due to AI-related spending. Alibaba has committed nearly half of its three-year capital expenditure plan of 380 billion yuan (approximately $56.5 billion) to AI, with CEO Eddie Wu expecting these investments to break even within 2.5 to 3 years as margins improve and proprietary chips replace third-party hardware. The company's focus on a "full-stack AI" approach, covering chips, infrastructure, models, and applications, highlights its strategic commitment despite competitive challenges and U.S. export controls on advanced chips.
Analysts like Yang Tingwu of Tongheng Investment expressed reservations, noting that "Alibaba’s DNA is in e-commerce, not advanced tech," and questioned its ability to outmaneuver competitors in tech innovation despite heavy investment. However, Winston Ma, an adjunct professor at NYU School of Law, highlighted that Alibaba's capital raise, alongside those by U.S. giants like Alphabet and Intel, indicates a similar strategic playbook among global tech leaders in pursuing AI supremacy. The insider buying by Ma, Tsai, and Wu is seen as a credible signal of their belief in the long-term payoff of Alibaba's AI investments, particularly given the market's initial negative reaction to the share sale.
