Alphabet seeking $85 billion with stock facing 4-week losing streak
Alphabet CEO Sundar Pichai at the Bloomberg Tech conference in San Francisco on June 4, 2025.
David Paul Morris | Bloomberg | Getty Images
A month ago Alphabet briefly exceeded Nvidia by market value. The stock has been trending downwards since then, completing its fourth consecutive weekly decline; This is the longest losing streak in over a year.
That’s the mood facing the market, with Alphabet seeking $85 billion in new capital to fund its AI development. While Google has been Wall Street’s favorite mega-capitalization tech name for the past year, some doubt is creeping into the story as the cash-rich company seeks more money to develop infrastructure and artificial intelligence models that it hopes will compete with offerings from Anthropic and OpenAI.
“I never thought Google would have to turn to the public markets to finance its spending,” Dan Niles, founder of Niles Investment Management, said in an interview.
Niles said Alphabet has “the best stack in all of AI” at scale, citing its models, tensor processing units, or TPUs, Android distribution, cloud business and search dominance. This force, he argued, is what makes the stock’s rise so striking.
Like its hyperscaler peers, Google is spending historic sums of money on new data centers and the chips and systems needed to meet the growing demand for AI computing. In April, the company raised its capital spending forecast for this year from $185 billion to $190 billion.
Before it was announced Monday, $80 billion would be raised from share sales, including a $10 billion investment. Berkshire Hathawayand then increasing that figure to $85 billion on Wednesday. Google had already secured more than $55 billion in new debt since November. Melius Research predicts that Google’s free cash flow will turn negative over the next few years as AI capital spending increases.
Until very recently, investors were all in on this. Even after a four-week decline, Alphabet shares rose nearly 120% last year, hitting a record in mid-May. But a lackluster performance at last month’s Google I/O and concerns that the company is dangerously behind on AI coding models have factored into recent sales.
Comparison of Alphabet and Nasdaq last month
There’s another big reason why Alphabet is turning to the stock market: IPOs.
SpaceX is headed to Nasdaq next week and aims to raise a record $75 billion from its initial share sale. Anthropic has confidentially filed for an initial public offering, and OpenAI is expected to do so soon. The largest public offering in history took place Alibaba’s An increase of $21.8 billion in 2014. Each of the three mega-offers on the horizon will likely fetch several times that.
Alphabet may now be considering tapping the capital markets to secure its balance sheet before investors are asked to plow large amounts of cash into its new AI offerings. Despite how much is flowing into the AI business, capital is not infinite, Niles said.
Alphabet is pitching the raise as a way to maintain financial flexibility while ramping up spending. Executives tell investors that strong access to global debt and equity markets has become a strategic advantage given the scale of AI demand.
‘Unique opportunity’
“Supporting all of this at scale for our users, while also serving organizations and developers around the world, requires major compute investments,” Pichai said.
After Alphabet’s capex more than doubled this year, Pichai said he expected it to “increase significantly” again in 2027, with the vast majority spent on technical infrastructure.
CFO Anat Ashkenazi called the share offer “a strategic proactive move to optimize our financial flexibility and maximize long-term shareholder value creation.”
Alphabet’s pitch is that spending is already starting to show up in the business, particularly in the cloud.
Google Cloud revenue rose 63% year over year to a record $20 billion in the first quarter, while backlog nearly doubled sequentially to more than $460 billion. Ashkenazi said AI solutions are the biggest contributor to cloud growth for the first time, with 75% of cloud customers using Alphabet’s AI products.
The company is also trying to prove that its scale means that every new dollar of its AI infrastructure is more valuable to its competitors than it is to them.
Alphabet said it has reduced Gemini service costs by 78% since 2025, and Ashkenazi said hardware and engineering improvements have reduced the cost of core AI responses by more than 30% since the launch of Gemini 3. These efficiency gains are critical at a time when companies continue to increase their spending on inference, model training, and AI coding.
Meanwhile, the company’s artificial intelligence products are also gaining popularity. Pichai said in the presentation that AI Overview currently has more than 2.5 billion monthly users, while AI Mode surpassed 1 billion monthly users in the year after launch.
Analysts at HSBC said in a report that further capital raisings are likely in the hyperscaler environment as all major players look to keep up with demand and avoid falling behind rivals.
Goldman Sachs CEO David Solomon, whose firm was involved in the Alphabet transaction, suggested the stock offering would be a test of sorts for the market, calling it the “first real data point” for these major AI stock sales.
He cautioned that although there is plenty of money around the world to fund the current level of funding, sentiment could change quickly, especially given the unprecedented amount of capital being raised.
“We’re definitely in a time where there’s more greed than fear,” Solomon told CNBC’s Leslie Picker in an interview this week at the Economic Club of New York. “When capital is available, if you are consuming capital and it is available, take the capital.”
— CNBC’s Jennifer Elias contributed to this report.
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