Alibaba Plunges 8% After Record Share Sale as Burry Bails for JD.com

Alibaba shares tumbled as much as 8% in Hong Kong trading Monday after the e-commerce giant issued 710 million new shares at HK$112.70 apiece, raising HK$80 billion ($10.21 billion) at an 8.4% discount to Friday's close. It's the largest primary follow-on share sale ever completed by a Hong Kong-listed company, and the third-largest of its kind globally this year, trailing only offerings from Alphabet and Intel. U.S.-listed shares fell more than 3% in pre-market trading as investors digested the dilution. The move landed just a week after Alibaba's fiscal second-quarter report showed revenue up 9% to $39.64 billion, but non-GAAP earnings per ADS down 42% and operating income down 57% as AI spending ramped up.

The capital raise expands Alibaba's outstanding share count by roughly 3.7% and is earmarked entirely for AI infrastructure — chips, data centers, and machine learning models — as the company accelerates a previously announced $56.54 billion, three-year AI investment plan. Capital expenditures already jumped 75% to $10.07 billion last quarter, and management says nearly half of the three-year budget is already spent. Investor Michael Burry, who had rotated his Alibaba stake into a large JD.com position months earlier expecting to move back within a month or two, said this offering changed his mind. "Share issuance has become their new operating model," Burry said, adding that Alibaba would need to fall roughly 50% further before he'd consider buying back in. Despite the selloff, Wall Street analysts still rate the stock a Strong Buy, with a consensus price target of $185.67 — about 55.6% above current levels.

For investors, this is a textbook standoff between AI-driven growth spending and shareholder dilution. Alibaba is betting big that faster AI payback — now projected in two and a half years instead of three — will justify diluting existing holders to fund the buildout. Burry's exit is a reminder that even bullish long-term theses can get punished short-term when a company keeps tapping capital markets instead of funding growth from cash flow. If you own BABA, the key question is whether AI monetization shows up in revenue fast enough to offset the dilution math; if you're looking at JD.com as an alternative China e-commerce play, note that it doesn't carry the same AI capex burden — but also lacks Alibaba's cloud scale. Either way, expect more volatility in Chinese tech stocks as investors reprice AI ambition against balance-sheet discipline.