(June 2): Google parent Alphabet Inc is raising US$80 billion ($102 billion) through a package of equity offerings, including an investment deal with Berkshire Hathaway Inc, as the company races to fund its ambitious artificial intelligence (AI) spending plans.
The undertaking includes a US$40 billion so-called at-the-market programme to sell shares from time to time beginning in the third quarter, according to a statement on Monday. The company will also offer US$30 billion in underwritten offerings of shares and mandatory convertible preferred stock, as well as the US$10 billion deal with Berkshire.
Together, the transactions represent one of the largest equity deals of all time — and they bring an unexpected twist to a blockbuster year for initial public offerings (IPOs).
It’s rare for a large public company to raise this much equity, but the economics of the AI business have pushed Google and its peers to get creative. The company has embarked on an unprecedented spending spree to build the infrastructure that it needs to develop cutting-edge AI models and meet demand from customers who want to buy its chips to fulfil their own AI ambitions.
Google is trying to capitalise on a growing appetite for its homegrown AI chips, known as tensor processing units, or TPUs. They have become a key alternative to Nvidia Corp’s market-leading processors in an industry that requires tremendous amounts of computing power.
“AI is driving an expansionary moment for Alphabet,” the company said in the statement. “By scaling its investments, the company seeks to expand its foundational infrastructure to support the significant growth opportunity ahead.”
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Alphabet shares slipped 0.8% in late trading on Monday, after more than doubling over the past 12 months.
Chief financial officer Anat Ashkenazi said in April that the company’s capital expenditures in 2027 will be “significantly” higher than the up to US$190 billion it budgeted for 2026 — a level that would already be more than double last year’s total. In light of the new funding, Bloomberg Intelligence analyst Mandeep Singh said he believes the company’s spending on capital expenditures could reach US$300 billion next year.
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That level of spending would exceed even Alphabet’s operating cash flow, Singh said. In addition to financing Alphabet’s capital expenditures, the new transactions potentially pull money away from the offerings of Alphabet rivals, such as SpaceX, Anthropic PBC and OpenAI, which are all set to go public this year.
“There’s only so much capital you can allocate, even in the public markets,” Singh said. He added that if investors “allocate their capital to TPUs because they find that to be an attractive area because of Google’s growth prospects, then that does hurt the new IPOs, even though they are very fast growing companies”.
Alphabet is also taking advantage of its recent stock rally. It is now the second-most-valuable company in the world, behind Nvidia.
The mandatory convertible stock and the underwritten common equity offerings are expected to price on Tuesday after the market closes in New York, according to terms of the deal seen by Bloomberg News.
Berkshire Hathaway, the holding company long run by Warren Buffett, started building a stake in Google’s parent last year. It held Class A and Class C shares collectively worth about US$16.6 billion as of the end of March, according to regulatory filings.
Greg Abel, who took over the reins of the firm after Buffett retired last year, has started to invest its record US$397 billion cash pile. On Sunday, Berkshire announced its intention to buy home builder Taylor Morrison for US$6.8 billion, providing a vote of confidence in the US housing market.
Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley are leading the underwritten offerings, Alphabet said. Goldman Sachs is the agent for the private placement.
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