This article first appeared on GuruFocus.
Alphabet (NASDAQ:GOOG) fell 2.57% after hours after the company announced an $80 billion equity raise structured across three channels. A private placement with Berkshire Hathaway (NYSE:BRK.B) accounts for $10 billion, split between Class A shares at $351.81 and Class C shares at $348.20. A concurrent public offering will raise $30 billion, split evenly between depositary shares tied to mandatory convertible preferred stock and Class A and C shares. A further $40 billion at-the-market program is planned for the third quarter, giving Alphabet flexibility to issue stock gradually as conditions allow.
The raise follows Alphabet’s April decision to lift its annual capital spending forecast by $5 billion to $180$190 billion. The company said demand for its AI solutions from enterprises and consumers is “exceeding the company’s available supply.” Over the past year, Alphabet has raised more than $85 billion in debt across six currencies, bringing total debt above $100 billion. The equity raise suggests the company has reached the practical limits of debt-funded expansion.
