Alibaba shares fell 8.4%. Then Joe Tsai and Eddie Wu went shopping

Alibaba’s two most senior executives bought about $15.3m of their own company’s shares on Monday. The stock had just fallen further than at any point in more than a year.

Chairman Joe Tsai and chief executive Eddie Wu spent a combined HK$120m, according to filings with the Hong Kong exchange.

What each of them bought

Tsai paid roughly HK$80m for 720,000 shares. Wu bought 350,000 for about HK$40m.

Xinmei Shen and Coco Feng reported the purchases for the South China Morning Post, which called them a vote of confidence.

Both men filed separately with the exchange on Monday afternoon, hours after the market opened against them.

Between them the two own less than 2% of the company, Luz Ding noted for Bloomberg. The purchases barely move that.

The HK$120m they spent comes to roughly 0.15% of what the placement raises.

What the stock did first

Alibaba fell as much as 10% in Hong Kong on Monday and traded 8.4% lower at HK$112.70, Jenny Lee reported for CNBC.

Bloomberg put the drop at 8.5% and called it the biggest since early 2025. Semafor described it as the steepest single-day fall in more than a year.

US-listed shares fell 3.4% in premarket trading.

The raise that triggered it

Alibaba is issuing 710 million new shares at HK$112.70 each, against a Friday close of HK$123. The placement raises HK$80bn, about $10.2bn, and Alibaba is putting every net dollar into AI.

Bloomberg put the pricing at a 3.6% discount to Friday’s close of the US listing. The Alibaba share placement settles on Wednesday.

It is the company’s first since it listed in Hong Kong in 2019, according to the Post.

The shares are going to investors outside the United States. Alibaba calls the deal the largest primary follow-on offering ever by a Hong Kong-listed company, and the biggest Regulation S equity offering on record.

Only Alphabet and Intel have run bigger primary follow-ons anywhere this year.

The week in order

Alibaba published its June-quarter results on Thursday. It priced the placement on Sunday, and the Hong Kong market opened on it for the first time on Monday morning.

The shares fell through the session. Tsai and Wu filed their purchases that afternoon. Settlement comes on Wednesday.

The demand was there

Institutional investors asked for close to three times the shares on offer, people familiar with the deal told both Bloomberg and the Post.

Analysts put that down to stronger growth visibility at the company, the Post reported.

The book filled three times over. The stock still dropped 8%.

What the market was reacting to

Alibaba reported days earlier that quarterly net profit had fallen 75%. Capital expenditure rose 75% in the same quarter, to 67.7bn yuan.

The company committed in early 2025 to spending at least 380bn yuan on cloud and AI infrastructure over three years. Reports suggest roughly half of that has already gone.

What Wu says the spending buys

Cloud and AI revenue rose 45% in the quarter, to 48.44bn yuan. Alibaba says its AI model services now run above 16bn yuan in annual recurring revenue.

Wu has been direct about the order of events. “In order to be able to capture that future growth, we first need to make these capex investments to build out the necessary compute capacity,” he said.

He has also said Alibaba’s own chips could lift margins substantially as they scale.

Its rivals are spending too

Tencent’s capital expenditure rose 65% from the previous quarter, to 52.8bn yuan, CNBC reported.

Its AI compute bill has already outgrown its cash flow, and the fallback plan involves renting out capacity.

The anxiety is not confined to China

Alibaba raised the money to keep up in the global AI race, Jeronimo Gonzalez wrote for Semafor, and some traders were not convinced by the plan.

Investors worldwide worry that revenue at technology companies is not keeping pace with AI spending, he wrote. The spending has added to their debt, which is part of why several firms have turned to selling equity instead.

Alphabet did exactly that in June, raising $85bn in the largest equity offering on record.

While end uses and costs stay uncertain, a Reuters columnist wrote, the eventual payoff remains a finger-in-the-wind estimate.

One analyst made the case for it

Alibaba can chase AI growth because it owns both a cloud arm and a strong model, Vey-Sern Ling of UBP told CNBC after the earnings.

Profits might weaken in the near term, the senior equity advisor said, and capital expenditure might rise further.

What the money is meant to build

Alibaba runs Qwen, which Bloomberg describes as the most popular AI model family in the world. Its models passed 3 billion downloads this month, ahead of Meta and Google, Bloomberg reported.

The underlying figures put that margin narrower than the company claims.

It also runs the Qwen App, a chatbot that handles shopping, navigation and payments as agentic tasks. That is the consumer end of the same stack the placement is meant to pay for.

The proceeds will fund its full-stack AI capabilities, the company says, including expanding its AI infrastructure.

What Alibaba has not said

The company has not broken down how the $10.2bn splits between chips, data centres and model training.

It has not said whether the 380bn yuan commitment now rises. Reports have suggested it is weighing an increase to 480bn yuan.

It has not said whether more placements follow, or what happens to the spending plan if the share price stays where Monday left it.

Neither Tsai nor Wu has commented publicly on the purchases beyond the filings.