Alphabet issues $80bn in shares to fund AI expansion
John Power
Alphabet announced an $80 billion share sale to raise capital for AI infrastructure, with $10 billion going to Berkshire Hathaway. CEO Sundar Pichai cited “unprecedented demand” as the company ramps up spending to stay competitive in the AI race.
US tech conglomerate Alphabet, the parent company of Google, announced on Monday a plan to issue shares worth $80 billion to fund the deployment of artificial intelligence (AI).
Alphabet said the fundraising would help finance the AI infrastructure needed to meet “unprecedented demand from customers”.
According to the announcement, about $10 billion worth of shares will be sold to Berkshire Hathaway, the conglomerate run by legendary investor Warren Buffett for six decades. The remaining $70 billion comes from $30 billion in underwritten issuance — a type of share sale in which a financial institution buys the shares to sell to investors — and $40 billion in gradual sales on the open market.
“The company is seeing strong demand for AI solutions and services from businesses and consumers at a level that exceeds current supply,” Alphabet stated. “By expanding investment, the company seeks to develop the foundational infrastructure to support significant growth opportunities ahead.”
Alphabet shares, which have a market capitalisation of over $4.5 trillion, fell about 1% in after-hours trading following the announcement.
Like other Silicon Valley titans, Alphabet — whose AI operations include the Gemini assistant, data centres and cloud services — has committed enormous sums to AI infrastructure. The company said in a recent earnings call that capital expenditure is expected to reach $180-190 billion this year and rise “meaningfully” by 2027.
US tech groups including Alphabet, Microsoft, Amazon and Meta are expected to spend about $800 billion on AI-related capital investment by 2026, according to analysis by Goldman Sachs.
Troy Hooper, co-head of Americas equity capital markets at Mergermarket, commented that Alphabet’s fundraising plan reflects the fierce competition in the race to lead AI development. “For large-scale infrastructure providers, computing capacity is a direct driver of future revenue,” Hooper told Al Jazeera. “By using equity, Alphabet brings in permanent capital rather than burdening a balance sheet that is already absorbing record capital spending.”
Hooper argued that US tech giants view underinvesting in AI as an “existential risk”, while overinvesting is merely “expensive”. “The logic is simple: underinvestment is an existential risk; overinvestment is merely expensive. Microsoft, Amazon, and Meta are making similar calculations. Owning massive scale reduces the marginal cost of training advanced models, creating a moat that smaller competitors struggle to match. The clear message: The winners of the AI era will be determined not only by algorithms but also by who owns the largest and most efficient computing platform.”
