On August 25, BofA Securities ****** yst Joyce Ju reiterated a Buy rating and $172.00 price target on Alibaba Group Holding Limited (NYSE:BABA). The rating affirmation follows one of the largest capital raises by Alibaba. The tech giant raised HK$80 billion ($10.2 billion) in Hong Kong's largest follow-on share offering to invest in its AI infrastructure.
The demand attracted $28 billion of orders, including $6 billion from long-only and sovereign investors. Following the news, the stock plunged as much as 10% in Hong Kong amid fears of capital burning and shareholder dilution. BofA held firm anyway.
Jack Ma
According to Alibaba Group Holding Limited (NYSE:BABA), 100% of the net proceeds from the sale will go to Alibaba's full-stack AI capabilities. However, investors are worried because the tech giant's AI push is increasingly becoming expensive and the recent sale makes the near-term picture even messier.
BofA itself has acknowledged that the placement will likely weigh on sentiment considering the shareholder dilution and depreciation tied to AI infrastructure deployment. There is also the uncertainty tied to how long it takes for capex to remain elevated and possibility of further funding.

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