Alibaba's Hong Kong-listed shares fell as much as 10 per cent on Monday after the Chinese e-commerce and cloud computing company launched a $10.2 billion share placement priced at HK$112.70 apiece, an 8.4 per cent discount to Friday's close. The company said it will use proceeds to fund AI-related development and infrastructure expansion amid intensifying competition and U.S.-China tech tensions.

Investors worried the placement would dilute their holdings and questioned returns on the company's massive AI spending. "It's negative news in the short-term as the share placement dilutes shareholders' interest," said Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management. The deal is the largest-ever primary follow-on offering by a Hong Kong-listed company and the third-largest globally this year after placements by Alphabet and Intel.

Alibaba said last week it had already spent nearly half of its three-year capital expenditure plan and brought forward its projected payback on AI investment to two and a half years from three due to surging demand for AI services. Its quarterly net profit fell 75 per cent from a year earlier, primarily due to AI-related spending, Channel NewsAsia business reports.