Supplementing ammunition! Alibaba issues $3.2 billion "zero-coupon convertible bonds," 80% used to enhance cloud infrastructure

As the smoke rises again on the local living battlefield, Alibaba is reserving key "ammunition" for its core cloud business and international strategy through a large-scale financing.

On September 10, Alibaba Group announced plans to issue zero-coupon convertible preferred notes with a total principal amount of approximately $3.2 billion, which will mature on September 15, 2032, and are unsecured preferred debt.

The announcement clearly outlines the use of the net proceeds: about 80% will be used to strengthen cloud infrastructure, including expanding data centers, technology upgrades, and optimizing services; the remaining approximately 20% will support the expansion of international business operations, consolidating its position in the global market and enhancing operational efficiency through strategic investments.

The timing of this financing action is quite delicate. On the same day the announcement was made (September 10), Alibaba had just launched the "Street Scanning Ranking" through its subsidiary Amap, investing over 1.1 billion yuan in subsidies, making a high-profile push into the local living services battlefield. This move has been interpreted by the market as a strong attack on the core territories of Meituan and Douyin.

Focusing on "AI + Cloud" and Internationalization

The target of this $3.2 billion financing precisely aligns with the future direction set by Alibaba Group's CEO Eddie Wu and Chairman Joseph Tsai in their shareholder letter. According to the announcement, about 80% of the funds will be used to strengthen its cloud business's competitive moat, which is consistent with the company's strategy of positioning "AI + Cloud" as its second growth curve.

According to a report by market research firm Omdia, Alibaba Cloud holds the largest market share in China's AI cloud market. In February of this year, Alibaba announced plans to invest over 380 billion yuan in building cloud and AI hardware infrastructure over the next three years. This bond issuance is a continuation and supplement to that long-term investment plan.

This is the second time Alibaba has conducted large-scale financing for similar goals this year. According to public information, in July, the company issued approximately 12 billion Hong Kong dollars in zero-coupon exchangeable bonds, with the funds also aimed at investing in cloud computing infrastructure and supporting international e-commerce operations. The ongoing capital investment highlights Alibaba's strategic determination in these two major areas.

Last year, Alibaba issued $5 billion in convertible bonds, setting the highest record for dollar-denominated bond issuance by an Asian company at that time.

Local Living "War" Reignited

While reserving funds for long-term strategies, Alibaba has not relaxed its competition in the existing market. Wallstreetcn reported that on September 10, Alibaba leveraged the Amap platform, which has a large user base, to make a high-profile entry into the local living services sector with over 1.1 billion yuan in subsidies, directly confronting Meituan and Douyin.

Amap aims to compete not only for transactions but also for the power to define the next generation of consumption scenarios. It will also work alongside Taobao Flash Sale to become an important lever for Alibaba to reshape local living.

This action, regarded internally as an S-level project, resonates with the timing of this bond issuance, but the uses of the funds are independent of each other It reveals Alibaba's current grand strategy of "dual-line operations": on one hand, reigniting the aggressive offensive in the consumer battlefield through products like Amap, competing for offline traffic entry; on the other hand, ensuring that the long-term technological barriers centered around cloud computing and AI can be continuously reinforced through financial tools such as bond issuance