Alphabet aims to raise $80 billion for AI spending

Alphabet, Google's parent company, is raising a whopping $80 billion to further ramp up its investments in artificial intelligence. Part of the capital comes from Berkshire Hathaway, Warren Buffett's investment firm, which is participating in one of the largest equity financings ever.

The capital raise consists of several components. For example, Alphabet is launching a $40 billion “at-the-market” program, under which new shares will be sold gradually starting in the third quarter. In addition, the company is issuing $30 billion in common stock and mandatory convertible preferred stock. The remaining $10 billion will be contributed through Berkshire Hathaway’s investment.

With a total value of $80 billion, the operation ranks among the largest stock offerings ever. At the same time, the deal underscores how far technology companies are willing to go to secure their lead in the AI race.

It is rare for a large publicly traded company to raise this much capital. But the economic realities of the AI sector are forcing Google and its competitors to get creative.

The company is undertaking an unprecedented wave of investment to build the infrastructure it needs. This infrastructure is intended to develop advanced AI models and to meet the demand from customers who want to buy Google’s chips for their own AI ambitions.

In doing so, Google is seeking to capitalize on the growing interest in its own AI chips, known as tensor processing units (TPUs). These have become a key alternative to Nvidia’s market-leading processors in a sector that demands enormous amounts of computing power.

“AI represents a growth opportunity for Alphabet,” the company said. “By scaling up its investments, the company aims to expand its core infrastructure to support the significant growth opportunity that lies ahead.”

That Alphabet is prepared to dig deep into its pockets for AI was already evident earlier this year from statements by Chief Financial Officer Anat Ashkenazi. In April, she stated that investments in 2027 will be “significantly” higher than the maximum of $190 billion planned for 2026. That amount alone is already more than twice as high as it was a year earlier.

With the new funding round included, Bloomberg Intelligence analyst Mandeep Singh expects total investments next year to reach as high as approximately $300 billion. This would mean Alphabet would be spending more than it generates in annual operating cash flow.

According to Singh, this underscores just how fierce the competition surrounding artificial intelligence has become. He also believes that the massive funding round could have implications for other AI companies looking to go public.

“There’s only a limited amount of capital available, even in the public markets,” Singh said. If investors flock to Alphabet and its AI infrastructure—including its proprietary TPU chips—it could come at the expense of interest in IPOs by companies such as OpenAI, Anthropic, and SpaceX.

Meanwhile, Alphabet is reaping the full benefits of the AI rally on Wall Street. The company has now become the second-most valuable publicly traded company in the world; only Nvidia is larger. Following the announcement, the stock fell slightly by 0.8 percent in after-hours trading, but over the past twelve months, the share price has more than doubled.

Berkshire Hathaway is also increasing its stake in Alphabet. The investment firm, which was led by Warren Buffett for many years, began building a stake in the tech company last year. By the end of March, that stake had grown to a value of approximately $16.6 billion.

Under the leadership of Buffett’s successor, Greg Abel, Berkshire’s massive cash position is being deployed more and more actively. The holding company currently has approximately $397 billion in available funds. Earlier this week, Berkshire announced its intention to acquire homebuilder Taylor Morrison for $6.8 billion.

Alphabet’s stock offering and mandatorily convertible preferred shares are expected to be priced on Tuesday after the U.S. stock market closes. Goldman Sachs, JPMorgan Chase, and Morgan Stanley are advising on the transaction.