Alibaba’s push to bankroll its AI ambitions with a $10.2 billion share sale has put a fresh question to investors: can the company turn heavier spending into stronger returns before dilution takes its toll?

The pressure intensified after Alibaba announced plans to raise about HK$80 billion through what would be Hong Kong’s largest recorded follow-on offering by a company, joining a broader Chinese corporate drive to expand AI investment.¹ The offering was later priced at HK$112.70 a share, below Friday’s HK$123 close, underscoring the discount required to bring new stock to market.²

For Michael Burry, the answer was to leave. The Scion Capital founder, who had disclosed a new Alibaba position in April, said he had sold it and was instead building a “large” stake in rival e-commerce group JD.com. He had initially expected to return to Alibaba after a short spell, but reversed course: “I planned to move most of it back after a month or two. No longer.”²

Burry’s objection is not simply the fundraising itself, but what it signals about capital discipline. “I cannot bless share issuances,” he said, arguing that Alibaba’s return on invested capital will keep declining. He added that the stock would need to “fall by half for me to get interested again.”²

Alibaba’s spending case rests on AI: management is raising capital to pursue the technology while Chinese peers also accelerate investment. But investors have focused on the near-term cost. Quarterly profit fell 75% in the June period as AI-related capital expenditure rose, while the company’s US-listed shares were down 18.6% for the year and its Hong Kong shares down 13.9%.²

The split is now stark. Alibaba is betting that AI investment will secure its next phase of growth; Burry sees an expensive share issue and weakening returns, and has chosen JD.com instead.