Alphabet to raise $80 billion from stock sales to fund AI buildout

Alphabet It plans to sell $80 billion in shares, including Berkshire Hathaway’s $10 billion investment, it said Monday.

Google’s parent company said: expression It said the capital “will fund investments in world-class AI computing infrastructure to meet unprecedented customer demand.”

“The company is experiencing strong demand from businesses and consumers for its AI solutions and services at levels that exceed the company’s current supply,” Alphabet said. “By scaling its investments, the company aims to expand its core infrastructure to support the significant growth opportunity ahead.”

Google is significantly increasing its AI spending as it races to keep up with the technology’s other hyperscalers. The company in April revised its capital spending forecast this year to between $180 billion and $190 billion, up from $175 billion to $185 billion. When asked what was keeping Google executives up at night at the time, CEO Sundar Pichai said “computing capacity.”

“Whether it’s power, land, supply chain constraints, how can you meet this extraordinary demand right now?” he said.

Alphabet, Microsoft, Meta and Amazon are expected to pour more than $700 billion in total into capital expenditures this year. Wall Street analysts predict that total AI capital could reach over $1 trillion by 2027.

Alphabet’s shares have more than doubled in the past year, outpacing all of the company’s megacap peers as investors appreciate its AI investments and the returns it’s seeing through Google’s Gemini upgrades. The stock fell in extended trading on Monday.

In addition to the $10 billion from Berkshire, Alphabet plans $30 billion in underwritten offerings, including $15 billion in “trust shares representing compulsorily convertible preferred stock.” The remaining $40 billion will come from an issuance program for Class A and Class C shares that is expected to begin in the third quarter.

Goldman Sachs, JPMorgan Chase And Morgan Stanley are serving as joint book-running managers for the underwritten offerings and Goldman is the placement agent for the private placement.

Berkshire has been gaining a foothold in the Alphabet space since the third quarter of last year. Before Monday’s announcement, the investment firm’s stake in the search giant was worth about $20 billion, one of the company’s most significant positions.

Berkshire made one of the most significant technology investments in recent years when it announced a $4.3 billion bet on Alphabet in November. Apple is the company’s largest holding.

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