Alphabet, Google’s parent company, launches $80 billion equity offering to secure funding for AI investment

NEW YORK — Alphabet Inc., Google’s parent company, is moving ahead with a massive $80 billion fundraising plan to expand its artificial intelligence (AI) infrastructure. As Berkshire Hathaway, led by the "Oracle of Omaha" Warren Buffett, agreed to invest $10 billion directly, the race to build AI infrastructure is increasingly becoming a "capital war," not just a battle over technology.
In a statement on the 1st local time, Alphabet announced a plan to sell a total of $80 billion in shares. The package includes Berkshire Hathaway’s $10 billion investment. Of the $70 billion to be raised through the offering, $30 billion will be sold through an underwritten public offering, in which the underwriters buy the shares in full and then resell them. The remaining $40 billion will be sold through an at-the-market offering, or ATM, in which shares are sold periodically through the underwriters. Berkshire Hathaway plans to buy $5 billion each of Alphabet Class A common stock (GOOGL) and Alphabet Class C capital stock.
Alphabet said it plans to use the proceeds for "investment in world-class AI computing infrastructure to meet unprecedented customer demand." In effect, Google is securing firepower to avoid falling behind in the AI race. In April, Alphabet raised its capital expenditure outlook for this year to $180 billion to $190 billion, up from a previous range of $175 billion to $185 billion.
On Wall Street, the fundraising was seen as a sign that the AI race is shifting from a contest centered on technical capability to one driven by capital spending. The total capital expenditure of big tech companies such as Alphabet, Microsoft, Meta Platforms, and Amazon.com, Inc. is expected to exceed $700 billion this year. Some on Wall Street also expect AI-related capital spending to surpass $1 trillion by 2027.
pride@fnnews.com Reporter