Alphabet, Google’s parent company, said on June 2 that it will raise $80 billion through stock sales to fund its artificial intelligence (AI) spending.
The search engine giant said the stock offering, including a $10 billion investment by Berkshire Hathaway, will fund the company’s AI infrastructure buildout “to meet its unprecedented customer demand.”
“AI is driving an expansionary moment for Alphabet,” Alphabet said.
“The company is experiencing strong demand for its AI solutions and services from enterprises and consumers, at levels that are exceeding the company’s available supply.”
“By scaling its investments, the company seeks to expand its foundational infrastructure to support the significant growth opportunity ahead.”
Alphabet will raise $30 billion through regular bank‑led deals, including $15 billion in shares that later turn into preferred stock. The remaining $40 billion will be raised through the gradual sale of Class A and Class C shares, starting in the third quarter.
This is in addition to Berkshire’s $10 billion, marking the most significant technology investment in years for the former Warren Buffett-led firm. Berkshire revealed a $4.3 billion stake in the company last year, making it the tenth-largest equity holding for the legendary multinational conglomerate.
Goldman Sachs, JPMorgan Chase, and Morgan Stanley will execute the offer.
Alphabet has been expanding its AI-driven capital expenditures, mirroring other hyperscalers—Amazon, Meta, Microsoft, and Oracle—that have bolstered their AI spending plans in recent months to cover data center, graphics processing unit (GPU), and infrastructure buildouts.
In April, the company adjusted this year’s capex forecast to as much as $190 billion, from the previous estimate of $175 billion to $185 billion.
It has also been tapping global debt markets to ramp up AI investments, issuing more than $30 billion in corporate bonds earlier this year. This included a 1 billion British pound ($1.37 billion) century-long corporate bond in February that would not mature until 2126, attracting 10 times the demand.
The five major hyperscalers issued about $121 billion in bonds last year, “more than four times their 2020-2024 annual averages of $28 billion,” said Lawrence Gillum, chief fixed income strategist at LPL Financial.
Overall, U.S. investment-grade gross issuance could reach as much as $2.25 trillion, “with AI-related deals representing a material share.”
“This issuance is notably long dated, reflecting the multi-decade useful life of data centers and associated infrastructure,” Gillum told The Epoch Times in an emailed note.
“This marks a structural change in investment-grade (IG) credit supply, with important implications for duration, spreads, sector composition, and portfolio construction.”
‘Greater Clarity’
Shares of Alphabet slumped about 4 percent during the June 2 trading session. The stock is up 17 percent year-to-date.
Despite inflation worries and geopolitical strife, the U.S. stock market has shrugged off various headwinds. The major index averages are at or near all-time highs, as the AI boom continues to bolster equities in the United States and across the globe.
Market watchers say the current landscape suggests rising tides are lifting all boats.
While the Magnificent 7 stocks have captured all the attention, the other 493 S&P 500 companies have reported the highest earnings growth since 2021, according to FactSet Insights.
“There continues to be greater clarity on the duration of AI-related investment, and broader investor interest beyond Nvidia and AI platform companies or hyperscalers into more parts of the supply chain,” Josh Rubin, client portfolio manager at Thornburg Investment Management, said in a note emailed to The Epoch Times.
“Earnings have risen substantially across most of the AI supply chain.”
Whether investors still fear an AI bubble will be on display when Anthropic and OpenAI debut on the New York Stock Exchange this summer.
Claude maker Anthropic confidentially filed its initial public offering (IPO) prospectus with the Securities and Exchange Commission (SEC) on June 1. Market analysts expect Anthropic to debut at a valuation of $1 trillion.
No date has been announced, but the submission begins the process.
Correction: A previous version of this article misstated the percentage that Alphabet shares have risen by year to date. The Epoch Times regrets the error.
