- Chairman Joe Tsai and CEO Eddie Wu bought shares worth about HK$120 million after Alibaba’s record equity placement
- The insider purchases came as short selling surged and investors weighed Alibaba’s massive AI spending against near-term profit pressure
Alibaba Group’s top two executives bought about HK$120 million ($15.3 million) of the company’s shares as the stock tumbled 8.5% following its HK$80 billion equity placement, offering a show of confidence as investors grapple with the cost of the company’s AI ambitions.
Hong Kong exchange filings showed Chairman Joe Tsai bought 720,000 shares at an average price of about HK$112 each, while Chief Executive Officer Eddie Wu purchased 350,000 shares at about HK$111.60.
The transactions were made on August 24, the day after Alibaba announced the share sale.
Short sellers pile in
Alibaba’s Hong Kong-listed shares fell 8.54% that day to HK$112.50. Short-selling turnover reached HK$14.2 billion, according to exchange data, an unprecedented level for the city’s stock market.
The selloff came immediately after Alibaba placed 710 million newly issued shares with non-US investors at HK$112.70 each, raising HK$80 billion.
The company said the net proceeds would be fully directed toward building its full-stack AI capabilities and infrastructure.
The placement was nearly three times oversubscribed, with sovereign wealth funds and long-term investors accounting for more than 40% of demand.
Sovereign funds from the Middle East, Europe and Asia were among those participating, according to people familiar with the transaction.
The executives’ purchases are small relative to the size of the fundraising, but the juxtaposition is notable.
Alibaba is asking investors for billions of dollars to finance its AI expansion, while its two most senior decision-makers are putting their own money behind the stock.
The company isn’t short of cash. Alibaba held about 474.5 billion yuan ($60.5 billion) in cash and liquid investments as of June.
But its spending is accelerating rapidly. Capital expenditure reached 67.7 billion yuan in the latest quarter, up 75% from a year earlier, while free cash flow swung to a 44.7 billion yuan outflow.
Alibaba has already spent about 190 billion yuan of the 380 billion yuan three-year AI and cloud investment program announced in February 2025. Wu has indicated that the eventual investment could go well beyond the original 380 billion yuan target.
AI bet deepens
The market’s reaction reflects the tension between Alibaba’s long-term AI strategy and its near-term financial burden.
Renowned short seller Michael Burry has exited his Alibaba position, saying he would only become interested again if the stock were to halve.
Meanwhile, Citigroup, Jefferies and Bank of America remain bullish, arguing that AI investments could pay for themselves within two to three years.
Bullish analysts are also betting on Alibaba Cloud becoming a major beneficiary of China’s AI infrastructure buildout, with some forecasting external cloud revenue could reach $100 billion by 2030.
The contrasting bets are increasingly clear. Bears see AI spending as a prolonged drag on earnings; bulls see Alibaba’s infrastructure, cloud business and AI ecosystem as scarce strategic assets.
Alibaba has chosen to raise equity now to secure capital for the next phase of that expansion. The market’s 8.5% selloff suggests investors are still debating whether the future payoff will justify the cost.
