Google Isn’t Slowing Down, Will Invest 80 Billion Dollars in AI

Alphabet, the parent company of Google, has just announced a massive financial operation aimed at supporting its technological expansion.

The company aims to raise 80 billion dollars through multiple equity offerings, resources that will be aggressively deployed to expand its infrastructure and to finance the development of its AI infrastructure.

The move responds to a demand for computing tools that, as admitted by management itself, currently exceeds the available supply on the global market.

Google steps on the accelerator, raises new funds for its AI

The fundraising plan comprises three key steps. The first entails a public offering worth 30 billion dollars, supported by credit institutions and evenly split between Class A shares, Class C shares, and depositary shares linked to mandatory-conversion preferred shares.

The second step, which will commence in the third quarter, consists of a market sale program of 40 billion dollars, designed to provide the company with the flexibility needed to place securities gradually over time.

Finally, a private placement of 10 billion dollars featuring Berkshire Hathaway, the famous Warren Buffett’s holding company.

This tranche includes Class A shares at 351.81 dollars each and Class C shares at 348.20 dollars, slightly below Monday’s closes, a session in which the stock gave up about 2% in after-hours trading.

The entry of a player of Berkshire’s caliber, described by analysts as the shareholder every company would want to have, represents a strong validation signal for the long-term strategies of the Mountain View multinational.

Berkshire’s company, which began purchasing Alphabet shares in the third quarter of last year, has recently tripled its stake, bringing it to 16.6 billion dollars. Berkshire’s CEO, Greg Abel, is confident that the spending will yield more than adequate economic returns, even in the face of an inevitable issuance of new shares.

The balance-sheet numbers and rising expenses

To understand the scale of this strategic choice, it is necessary to look at the expected investment volumes. Last April, Alphabet raised its capital expenditure guidance by a further 5 billion, bringing it to an estimated range between 180 and 190 billion dollars for 2026, with forecasts of further significant increases in 2027.

These outlays nonetheless rest on a sound financial structure: in the first quarter of this year, revenues grew 22% year over year, reaching 110 billion dollars.

Meanwhile, the paying services user base has reached 350 million subscriptions. On the liabilities side, the company has raised over 85 billion dollars of debt in multiple currencies and markets over the past year, bringing total exposure to more than 100 billion.

This solid financial footing allows Alphabet to tackle massive infrastructure investments while keeping its finances fully secure.