Alibaba to Raise $3.2 Billion via Convertible Bond for AI and Cloud Expansion

Prime Highlights:

Alibaba will use 80% of the $3.2 billion bond funds to expand data centers, upgrade cloud technology, and meet rising AI demand.
CEO Daniel Wu said early AI investments are already delivering results, supporting growth in cloud computing and global e-commerce.

Key Facts:

The zero-coupon convertible bond matures in 2032 and converts into U.S.-listed shares at a 27.5–32.5% premium.
Alibaba has pledged $53 billion over three years for AI development, aligning with other Chinese tech giants investing in cloud and AI.

Background

Alibaba, China’s e-commerce and tech giant, announced plans to raise $3.2 billion through a zero-coupon convertible bond to fund its expansion in cloud computing and artificial intelligence. The deal, the biggest of its type this year, reflects Alibaba’s push to strengthen technology and global operations.

The company will use nearly 80% of the funds to expand data centers, upgrade technology, and improve cloud services to meet growing AI demand. The rest will go toward expanding international e-commerce and improving efficiency.

The bond, set to mature on September 15, 2032, will convert into U.S.-listed shares at a 27.5–32.5% premium. Alibaba has pledged $53 billion over three years to drive AI innovation and growth.

After the announcement, Alibaba’s Hong Kong-listed shares rose 2.3% following an early dip, while its U.S. stock fell 2.2%. Year-to-date, both shares have climbed more than 71%.

The step is one of a wider trend in Chinese tech companies, such as Baidu, Tencent, and Meituan, that have been raising funds to invest in AI and cloud services. Convertible bonds are also still a favorite alternative as they provide a low-cost method of raising funds, as well as providing the investors with an opportunity to make equity profits.

According to the CEO, Daniel Wu, the investments made by the company in AI are already starting to yield results, which gives a good direction towards the expansion of the company in cloud computing and global e-commerce markets.