Alphabet Increases Planned AI-Related Investment to $85 Billion

Alphabet Inc. Upsizes Equity Raise to $84.75 Billion

Google's parent company, Alphabet Inc., has increased the size of its equity raise to $84.75 billion, a significant increase from the previously announced $80 billion, in an effort to fund its growing artificial intelligence spending plans.

The equity offering includes a $40 billion at-the-market program, which will involve the company selling shares directly into the open market from time to time beginning in the third quarter. Additionally, the company has agreed to a $10 billion deal with Berkshire Hathaway Inc., while the remaining portion of the offering consists of $18 billion in Class A common stock and Class C capital shares and $16.75 billion in depositary shares.

The common and capital stock and mandatory sales priced late Tuesday after a day of marketing and attracted demand for multiple times the available shares. This is a rare occurrence for a company as large as Alphabet, which is typically not known for raising large chunks of cash through an equity offering.

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In a year dominated by headlines of technology and AI startups going public, a well-established, listed tech giant like Google preparing a massive equity offering as opposed to leaning further into buybacks has caught the market by surprise. Alphabet's offerings are poised to top Brazilian oil producer Petroleo Brasileiro SA's roughly $70 billion sale of common and preferred stock in 2010.

Google is trying to capitalize on a growing appetite for its homegrown AI chips, known as tensor processing units, or TPUs. These chips have become a key alternative to Nvidia Corp.'s market-leading processors in an industry that requires tremendous amounts of computing power. The race to build AI data centers to fully utilize the technology has led Alphabet and its megacap peers to boost capital expenditures to record levels.

Alphabet shares swung between gains and losses on Wednesday and were down about 0.3% at 2:45 p.m. in New York City.

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