(Yicai) Aug. 26 -- Jack Ma, the Chinese billionaire founder of Alibaba Group Holding, has spent more than HKD600 million (USD76.5 million) to increase his stake in the Chinese technology giant, according to a source.

Ma bought Alibaba shares in the past two days, signalling his confidence in the company’s prospects in the artificial intelligence space, a source told Yicai. In an exchange filing, Alibaba said Chairman Joseph Tsai and Chief Executive Eddie Wu had together invested about HKD200 million over the past two trading days to raise their stakes in the business.

The last time Ma and Tsai both added to their holdings of Alibaba’s stock was in 2024, when the Hangzhou-based company was grappling with fierce competition in the e-commerce sector and scrapped plans to spin off Alibaba Cloud, its cloud computing arm. The move was intended to signal that Alibaba was severely undervalued.

Last weekend, Alibaba announced a HKD80 billion (USD10.2 billion) discounted share sale to bankroll its AI ambitions. The firm will sell 710 million new shares at HKD112.70 (USD16.76) apiece, representing a discount of about 9 percent on its average closing price over the previous five trading days.

Alibaba’s shares [HKG: 9988; NYSE: BABA] closed 2.1 percent higher at HKD116.60 in Hong Kong today and 0.8 percent to USD119.44 in New York yesterday. They fell 8.5 percent and 0.7 percent, respectively, on Aug. 24, the day after the share placement was announced.

A softer share price following a stock offering is not uncommon, as the new shares dilute existing shareholder equity, often leading to a perceived loss of value in their holdings and triggering a near-term sell-off.

The placement, which completed today, was reportedly nearly three times oversubscribed and included long-term backers such as global sovereign wealth funds.

It was Alibaba’s first share sale since its secondary listing in Hong Kong in 2019. The decision to raise such a large amount of capital highlights the growing financial strain that AI development is imposing even on the largest tech companies.

Alibaba has been cranking up its investment in AI in recent years, building a full-stack AI layout that covers computing power, chips, models, and applications. AI-related products logged an annualized revenue run rate of CNY49.5 billion (USD7.4 billion) in the June quarter, which is expected to reach USD10 billion in this quarter, Wu said on Alibaba’s fiscal first-quarter earnings call last week.

By 2030, Alibaba Cloud’s revenue from outside sources is projected to hit USD100 billion, with a profit margin of 20 percent. The executive team expects AI capital expenditure to be recouped within two to three years.

Ma, who set up Alibaba in 1999, stepped down as executive chairman in 2019 to focus on philanthropy and education.

Editor: Futura Costaglione