Alphabet to Raise Up to $80 Billion in Equity to Fund Artificial Intelligence Initiative

Alphabet Raises $80 Billion in Equity Deal to Fund AI Spending Plans

Google parent Alphabet Inc. is undertaking a massive $80 billion equity offering, including a $10 billion investment deal with Berkshire Hathaway Inc., to fund its ambitious artificial intelligence spending plans.

The undertaking includes a $40 billion at-the-market program to sell shares from time to time beginning in the third quarter, according to a statement made on Monday. Alphabet will also offer $30 billion in underwritten offerings of shares and mandatory convertible preferred stock, as well as the $10 billion deal with Berkshire.

These 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. 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. Alphabet has embarked on an unprecedented spending spree to build the infrastructure needed to develop cutting-edge artificial intelligence models and meet demand from customers who want to buy its chips to fulfill their own AI ambitions.

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Alphabet 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. Alphabet's AI chips are a key part of the company's strategy to expand its foundational infrastructure and support the significant growth opportunity ahead.

Alphabet shares slipped 0.8% in late trading, after more than doubling over the past 12 months. The company's Chief Financial Officer, Anat Ashkenazi, said in April that the company's capital expenditures in 2027 will be "significantly" higher than the up to $190 billion budgeted for 2026, a level that would already be more than double last year's total. Bloomberg Intelligence analyst Mandeep Singh believes the company's spending on capital expenditures could reach $300 billion next year, exceeding even Alphabet's operating cash flow.

The new funding potentially pulls money away from the offerings of Alphabet rivals, such as SpaceX, Anthropic PBC, and OpenAI, which are all set to go public this year. Singh noted that there is only so much capital that can be allocated, even in the public markets, and that investors may allocate their capital to TPUs because of Google's growth prospects, potentially hurting the new IPOs.

Alphabet is also taking advantage of its recent stock rally, becoming 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.

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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 $16.6 billion as of the end of March, according to regulatory filings. Berkshire Hathaway's Greg Abel, who took over the reins of the firm after Buffett retired last year, has started to invest its record $397 billion cash pile. On Sunday, Berkshire announced its intention to buy home builder Taylor Morrison for $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.