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Alibaba Shares Slide after $10.2 Billion AI Share Sale Offered at Sharp Discount

FILE PHOTO: An Alibaba logo is displayed at the company's booth at China International Fair for Trade in Services (CIFTIS) in Beijing, China, September 10, 2025. REUTERS/Maxim Shemetov/File Photo
FILE PHOTO: An Alibaba logo is displayed at the company's booth at China International Fair for Trade in Services (CIFTIS) in Beijing, China, September 10, 2025. REUTERS/Maxim Shemetov/File Photo
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Alibaba Shares Slide after $10.2 Billion AI Share Sale Offered at Sharp Discount

FILE PHOTO: An Alibaba logo is displayed at the company's booth at China International Fair for Trade in Services (CIFTIS) in Beijing, China, September 10, 2025. REUTERS/Maxim Shemetov/File Photo
FILE PHOTO: An Alibaba logo is displayed at the company's booth at China International Fair for Trade in Services (CIFTIS) in Beijing, China, September 10, 2025. REUTERS/Maxim Shemetov/File Photo

China's Alibaba shares slumped in Hong Kong trade on Monday after it launched a $10.2 billion share sale at a steep discount to fund its AI ambitions, with investors focused on stock dilution and execution risks.

The e-commerce and cloud computing giant said it would sell HK$80 billion ($10.2 billion) of new shares at HK$112.70 each, an 8.4% discount to Friday's close, to fund chips, AI infrastructure and models.

AI has become Alibaba's biggest driver of revenue growth at a time when e-commerce growth is stagnating, and its Qwen AI models are some of the most popular in China. Even so, some investors have reservations about how successful it will be.

"Alibaba's DNA is in e-commerce, not advanced tech," said Yang Tingwu, vice general manager of asset manager Tongheng Investment.

"No matter how much it invests in AI hardware, it will likely be outmaneuvered by competitors in tech innovation."

Its Hong Kong shares fell as much as 10.5% but pared losses in the afternoon to trade in line with the discount offered.

The sale of 710 million ordinary shares is equivalent to 3.6% of enlarged total shares outstanding.

It drew strong demand, attracting $28 billion of orders, including $6 billion from long-only and sovereign investors, three people with knowledge of ⁠the matter said.

About ⁠40% of the book will go to long-only and sovereign investors, including major sovereign wealth funds in Europe, Asia and the Middle East, two of the people said.

Investors included the Qatar Investment Authority (QIA), Norway's Norges wealth fund and Hillhouse, according to one person.

Alibaba, Hillhouse, QIA and Norges did not immediately respond to Reuters requests for comment.

Alibaba chairman Joe Tsai bought 720,000 Hong Kong shares at an average price of HK$112 apiece, for about HK$80 million in aggregate, while Eddie Wu, the group's chief executive, bought 350,000 Hong Kong shares at an average price of HK$111.6 per share, totaling HK$40 million, according to the group's stock exchange disclosures later on Monday.

As the US and China vie for tech supremacy, investment in AI and related infrastructure such as data centers ⁠has reached dizzying heights.

The biggest Chinese AI names are, however, investing only a fraction of what their US counterparts are spending. Most fundraising globally is also conducted via heavy debt issuance — a trend that has begun to test the limits of investor demand. Japan's SoftBank on Monday announced it would issue $6.3 billion in bonds to retail investors — its biggest debt offering to date.

Alibaba's stock sale is the largest-ever follow-on offering of new shares by a Hong Kong-listed company and the third-largest globally this year after offerings of nearly $85 billion from Alphabet and $20 billion from Intel.

"Alibaba's placement — landing alongside massive capital raises by Alphabet and Intel in the US — proves that American and Chinese tech giants are operating off the exact same strategic playbook," said Winston Ma, an adjunct professor at NYU School of Law and former head of North America for sovereign wealth fund China Investment Corp.

"The global sovereign investors aren't blind to US-China tech friction — they are compartmentalizing it," Ma said, adding that they were more comfortable with compliance issues when investing in Chinese commercial cloud and open-weight AI plays over restricted semiconductor hardware.

Capital Group, one of the world's largest active investment managers, estimates that AI-related capital expenditure by the biggest US hyperscalers — Microsoft, Amazon, Alphabet, ⁠Meta and Oracle — reached $791 billion as of ⁠July 31. That compares with $118 billion for China's ByteDance, Alibaba, Tencent and Baidu.

Part of the reason for the more subdued Chinese spending has been a lack of access to Nvidia's most advanced AI chips due to US export controls. That in turn has pushed Chinese firms to develop more efficient AI models and infrastructure that require less computing power and capital.

The share placement comes a week after Alibaba reported quarterly net profit that tumbled 75% from a year earlier, primarily due to AI-related spending.

Underscoring how AI has leapt to become a key priority, Alibaba this year separated its AI operations from its cloud business, with the new unit to be led by CEO Eddie Wu.

In addition to positioning itself as a key AI partner for companies operating in China, it is preparing a listing of its chipmaking arm T-Head and developing AI agents linking services across its sprawling ecosystem, including shopping, food delivery, travel and entertainment.

Separately, Alibaba has helped train a large language model that Apple will sell in the Chinese market, sources have said.

At earnings, Alibaba said it had committed nearly half of its three-year capital expenditure plan of 380 billion yuan ($56.5 billion), but that AI computing investments have a "high certainty" of returns.

Wu said such investments are expected to break even within three years, possibly even 2.5 years, as margins improve and proprietary chips replace third-party hardware.

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Technology

‘We’re Losing Control,’ AI Pioneer Yoshua Bengio Warns

Canadian computer scientist Yoshua Bengio speaks during an interview with AFP in the offices of Law Zero in Montreal, Quebec, on September 15, 2026. (AFP)
Canadian computer scientist Yoshua Bengio speaks during an interview with AFP in the offices of Law Zero in Montreal, Quebec, on September 15, 2026. (AFP)
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‘We’re Losing Control,’ AI Pioneer Yoshua Bengio Warns

Canadian computer scientist Yoshua Bengio speaks during an interview with AFP in the offices of Law Zero in Montreal, Quebec, on September 15, 2026. (AFP)
Canadian computer scientist Yoshua Bengio speaks during an interview with AFP in the offices of Law Zero in Montreal, Quebec, on September 15, 2026. (AFP)

The Canadian computer scientist considered one of the founders of AI, Yoshua Bengio, told AFP that humanity is "losing control" of the technology and the world needs guardrails similar to nuclear arms controls.

Fears about the dangers of AI have intensified in recent weeks, as workers from major companies have resigned with warnings about potentially existential threats to human life if the pace of technological advancement is not checked.

Bengio is a University of Montreal professor who won the 2018 Turing Prize, computing's Nobel, alongside Geoffrey Hinton, widely known as the "godfather of AI."

For Bengio, "there's a reason that companies are saying this is going too fast, that we're losing control."

"People like me have been expecting this for a long time," the 62-year-old told AFP on Tuesday, saying security discussions surrounding AI have not been adequately robust.

There was broad-based alarm after OpenAI disclosed that a swarm of AI agents -- programs that can take actions on their own -- had carried out an unauthorized breach of the open-source platform Hugging Face in July.

Such autonomous action is the central threat, Bengio said, warning of a situation where AI agents "have the ability to get through cybersecurity barriers and enter any company."

Last year, Bengio founded the non-profit LawZero aimed at creating a new form of advanced AI that is "designed to be trustworthy and safe."

Bengio told AFP people need to be aware of the risks ahead.

AI agents may foster "an ability to establish an individual connection and persuade humans to act in ways that suit it but are not necessarily good for all of us," a capability that could have sweeping political consequences, he said.

Longer-term, "AI might not even need human beings anymore to do real things in the physical world," he added.

In that scenario, "one extreme could be the destruction of humanity," he warned.

"That's an extreme," he acknowledged, but noted that even if a banking system were shut down, "that's still very, very serious."

Technology

AI Rivals Found Rare Agreement on Safety. Putting It into Practice Is Harder

A photo taken on February 26, 2024 shows the logo of the Artificial Intelligence chat application on a smartphone screen (L) and and the letters AI on a laptop screen in Frankfurt am Main, western Germany. (AFP)
A photo taken on February 26, 2024 shows the logo of the Artificial Intelligence chat application on a smartphone screen (L) and and the letters AI on a laptop screen in Frankfurt am Main, western Germany. (AFP)
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AI Rivals Found Rare Agreement on Safety. Putting It into Practice Is Harder

A photo taken on February 26, 2024 shows the logo of the Artificial Intelligence chat application on a smartphone screen (L) and and the letters AI on a laptop screen in Frankfurt am Main, western Germany. (AFP)
A photo taken on February 26, 2024 shows the logo of the Artificial Intelligence chat application on a smartphone screen (L) and and the letters AI on a laptop screen in Frankfurt am Main, western Germany. (AFP)

The leading AI industry voices rarely agree — so when they do, it’s no wonder it captures attention.

Anthropic’s Dario Amodei, OpenAI’s Sam Altman, SpaceXAI's Elon Musk and other prominent industry leaders have said in recent days that AI’s development needs to slow down. The consensus came after an Anthropic researcher resigned with a dire warning about the threats the technology poses to humanity.

But obstacles including domestic and global competition, profit motivations and pushback from President Donald Trump all stand in the way of a coordinated effort to pace AI’s development.

Still, this moment could force the industry to wrestle with a “reframing of what we consider successful," said Nick Reese, former director of emerging technology policy at the Department of Homeland Security and an adjunct professor at New York University.

“What if we considered success in AI the same way that we consider success for airlines? On time and haven’t had a crash in who knows how long,” Reese said. “We don’t tolerate commercial airline crashes, but we do tolerate significant AI failures.”

Here's what tech leaders want an AI slowdown to entail

In theory, the leading AI startups could slow the progress of their models at any time. But leaps in the technology have partly sprung from competition to build even more powerful models, all with the blessing of a White House that doesn't want the US to lose its edge over China. Anthropic and OpenAI also are racing toward potentially record-breaking public offerings on Wall Street, although the latter said it's holding off on going public this year while it continues its safety efforts.

That's why the proposals floated by industry depend upon mutual collaboration and, to an extent, government regulation.

Amodei recently published a lengthy essay in which he outlined a plan for slowing advanced AI development.

One proposal calls for companies at the forefront of AI, often called frontier labs, to commit to giving “ongoing, employee-like access” to independent outside evaluators. Evaluator teams would have offices, access badges and company laptops so they can monitor safety practices.

Anthropic Co-Founder and CEO Dario Amodei speaks at Dreamforce 2026 summit in San Francisco, California, US, September 15, 2026. (Reuters)

Anthropic is “unilaterally committing” to this step now, Amodei wrote. Altman called it a “great idea” on social media and said OpenAI will follow suit.

Altman said he welcomed a “federal framework” setting out safety standards for advanced AI, but said the company didn’t need to wait for legislation or an antitrust exemption before addressing AI safety.

Amodei's essay also called for government regulation and intervention, including coordination between frontier AI companies with the help of the US government and the governments of other democratic countries. He said he hopes the leading labs could establish “common safety standards as well as limits on the rate of unchecked AI progress.”

Amodei's plan also includes the US and other countries working to coordinate with “authoritarian governments.” He acknowledged the difficulty, specifically citing challenges in getting cooperation from China.

The Anthropic head outlined several levels of agreement that global leaders could sign off on. The most feasible, he said, would be an agreement banning “certain narrow and obviously dangerous uses of AI" like producing biological weapons or allowing users to do so. More difficult would be getting the US and its adversaries to agree to test models before release, possibly through a global standards body, for risks in areas like cybersecurity or biological threats.

Still harder would be to set a “speed limit” on AI models that can develop improved versions of themselves on their own, known as recursive self-improvement.

“Slowing the rate from ‘extremely fast’ to ‘only somewhat fast’ gives up relatively little strategic advantage, while potentially greatly improving safety,” Amodei wrote.

He drew an analogy to Cold War-era treaties in which “capping the number of missiles limited the potential for destruction while preserving each country’s deterrent.”

Amodei said the most difficult proposal to implement would be a “full pacing, or even ‘pause,”’ whereby participating governments agree to substantially limit the overall rate of AI development.

Writing on social media, Altman said the “pacing” of AI development does not mean stopping. AI progress will continue to be rapid, Altman said on X. “But it should be slower than it otherwise could be; interventions like safety cases and monitoring have significant costs.”

“Pacing will be well worth this cost,” he said, adding that “no amount of American competitive pressure should justify recklessness.”

Questions swirl about AI slowdown's feasibility

While experts said the sense of agreement across the industry is promising, there are many unanswered questions.

A slowdown is possible “in theory,” said Sandra Wachter, professor of technology and regulation at the Oxford Internet Institute.

But in practice, “it would require substantial coordination and cooperation between companies and governments across countries,” something she deems “highly unrealistic” due to “the current state of the world.”

Options for promoting a slowdown, she said, include governments doing more to hold AI companies responsible for the risks posed by their technology and pursuing regulation that limits their access to electricity, water and other resources that power data centers.

OpenAI CEO Sam Altman speaks at Dreamforce 2026 summit in San Francisco, California, US, September 15, 2026. (Reuters)

The idea of embedding external evaluators inside companies has been mostly well-received by the industry, but some critics questioned how independent the assessors could be and how the evaluation standards would be drawn up. The result could be even more concentration of power, Aidan Gomez, co-founder and CEO of the Canadian AI lab Cohere, wrote in response to Amodei's essay.

“A handful of the most powerful labs based in one country would agree on shared standards and the limits to how fast the technology should advance,” Gomez said.

He also pushed back against Amodei’s idea to have the US government give frontier labs waivers to bypass antitrust restrictions.

“If this is the most consequential technology in human history, then the rules for it cannot be written by a small group of commercially aligned companies behind an antitrust waiver," Gomez said.

Elham Tabassi, the director of the AI and Emerging Technology Initiative and senior fellow at the Brookings Institution, said until the measures companies are committing to are solidified and made public, having independent auditors would be a “voluntarily-provided, company-controlled” move.

Tabassi said it is crucial AI companies continue to invest in developing “scientifically valid” ways of testing and measuring their models as they aim for increased safety. Without this, regulation won't hold as much power, she said.

Trump resistance, pressure to beat China stand in the way

The Trump administration has long favored a light-touch approach to the AI industry in hopes that innovation would flourish and that AI development in the US would surpass China.

The competition between American and Chinese AI companies has been likened to an arms race, which experts said is not conducive to collaboration. That creates “conditions where now we have this existential adversary,” Reese said.

Still, some industry leaders remain “cautiously hopeful" about AI development moving in a more safety-minded direction, said Zahra Timsah, the co-founder and CEO of governance platform i-GENTIC AI.

“Within days, you have CEOs that are competing — all of them, all of a sudden, found common ground. You have senators from both parties that started to advance different forms of oversight," Timsah said.

“It’s receiving attention, but attention is not the same as implementation. Will it really work? I don’t know.”

Technology

Smaller Phone and Laptop Makers Dig in for Years of Memory Scarcity

Teenagers look at their mobile phone screens during an interview with Reuters about the bill aimed at banning the use of social networks for those under 15 and mobile phones in high schools from the start of the 2026 school year, in Paris, France, February 20, 2026. (Reuters)
Teenagers look at their mobile phone screens during an interview with Reuters about the bill aimed at banning the use of social networks for those under 15 and mobile phones in high schools from the start of the 2026 school year, in Paris, France, February 20, 2026. (Reuters)
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Smaller Phone and Laptop Makers Dig in for Years of Memory Scarcity

Teenagers look at their mobile phone screens during an interview with Reuters about the bill aimed at banning the use of social networks for those under 15 and mobile phones in high schools from the start of the 2026 school year, in Paris, France, February 20, 2026. (Reuters)
Teenagers look at their mobile phone screens during an interview with Reuters about the bill aimed at banning the use of social networks for those under 15 and mobile phones in high schools from the start of the 2026 school year, in Paris, France, February 20, 2026. (Reuters)

Independent phone and laptop makers are redesigning products, testing incoming chips for fakes and passing on costs as a memory shortage they expect to last through 2027 squeezes the lower end of the device market.

Availability, not price, is the binding constraint, executives at three companies said.

"If you don't have allocation, you're out of the game anyhow," said Raymond van Eck, chief executive of Dutch repairable-phone maker Fairphone.

Memory maker ‌SK Hynix's CEO ‌in July said 2027 would be "the worst year ‌in ⁠the industry's history from ⁠the supply perspective," with demand outstripping capacity beyond 2030.

Counterpoint Research forecast in June that smartphone shipments would fall 13.9% this year to 1.08 billion units, the steepest annual decline on record, as memory costs make entry-level phones uneconomical to build.

THE RALLY SLOWS, THE SHORTAGE DOESN'T

TrendForce expects conventional volatile memory (DRAM) contract prices up 13-18% this quarter, against 93-98% in the first.

Jolla, a Finnish ⁠handset maker founded by former Nokia engineers, said its ‌combined storage and DRAM package rose ‌to a peak at the end of March and has held since, confounding ‌spring forecasts of a doubling by autumn.

"We are very happy for ‌that, of course, for the time being," said Chief Executive Sami Pienimäki, who expects supply to normalize only from 2028.

The scale of the mismatch became clear late last year, said Nirav Patel, chief executive of US repairable-laptop maker Framework, prompting "everyone ‌trying to grab as much supply, as much inventory as they could, as quickly as they could", which deepened ⁠the shortage.

Unable ⁠to afford a stockpile, Framework places non-cancellable orders well ahead without knowing final price, timing or volume.

DESIGNING FOR SCARCITY

Jolla designed two motherboard variants so it can swap the combined package for discrete chips. Framework made memory modular from the start; customers now fit memory salvaged from older machines.

Jolla stress-tests samples from every batch it receives, checking the chips are new rather than refurbished parts resold as first-hand. Where prices spike, Pienimäki said, sellers follow.

Memory can account for almost 60% of the bill of materials on handsets priced around $400, van Eck said. Each firm passes that on differently: Framework reprices quickly as costs land, Jolla added a paid memory upgrade, and Fairphone has not raised prices at all.