Alphabet said Monday it plans to sell $80 billion in stock to fund what the company described as its world-class AI compute infrastructure. The Google parent company said the capital will go toward meeting what it called unprecedented customer demand for its AI products and services.
According to CNBC, the $80 billion raise includes a $10 billion private placement investment from Berkshire Hathaway, $30 billion in underwritten offerings, and $40 billion from an at-the-market offering program for Class A and Class C shares expected to begin in the third quarter.
Alphabet stated directly that demand is outrunning supply. "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," the company said. "By scaling its investments, the company seeks to expand its foundational infrastructure to support the significant growth opportunity ahead."
CEO Sundar Pichai put a finer point on it when asked earlier this year what keeps Google executives up at night. "Be it power, land, supply chain constraints, how do you ramp up to meet this extraordinary demand for this moment?" he said.
The stock offering comes on top of a series of debt market moves. Alphabet held a global bond issuance of more than $30 billion in February, raised roughly $11 billion in European markets in sterling and Swiss francs, and completed a $25 billion bond sale in November. The company also revised its capital expenditure forecast for this year to between $180 billion and $190 billion, up from an earlier estimate of $175 billion to $185 billion.
Alphabet is not alone in the spending race. Microsoft, Meta, and Amazon are expected to combine with Alphabet to pour more than $700 billion into capital expenditures this year. Wall Street analysts estimate total AI-related capital spending could climb above $1 trillion in 2027.
Berkshire Hathaway has been building its position in Alphabet since the third quarter of last year. Before Monday's announcement, its stake in the company was valued at about $20 billion. When Berkshire first disclosed a $4.3 billion bet on Alphabet in November, it marked one of the firm's most significant technology investments in years. Apple remains Berkshire's largest single holding.
Goldman Sachs, JPMorgan Chase, and Morgan Stanley are acting as joint book-running managers for the underwritten portion of the offering. Goldman is also serving as placement agent for the private placement with Berkshire.
Alphabet's stock has more than doubled over the past year, outperforming other large-cap technology peers. The stock slipped in extended trading Monday following the announcement.
