This article first appeared on GuruFocus.
Alphabet Inc. (NASDAQ:GOOG) is preparing one of the biggest equity raises the market has seen, as the Google parent looks to secure $80 billion for its expanding artificial intelligence infrastructure and compute plans. The package includes a $40 billion at-the-market share sale program beginning in the third quarter, $30 billion in underwritten common shares and mandatory convertible preferred stock, and a $10 billion investment deal with Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B). For investors, the message is hard to miss: Alphabet is leaning deeper into AI, and the cost of staying in the race could be moving sharply higher.
The raise comes as Alphabet tries to capture growing demand for its in-house tensor processing units, or TPUs, which have become a key alternative to Nvidia Corp.’s (NASDAQ:NVDA) market-leading processors. Alphabet said AI is creating an expansionary moment for the company, and the new capital could help scale the infrastructure needed to support future growth. Shares slipped 0.8% in late trading, even after more than doubling over the past 12 months, showing that investors may be weighing both the AI opportunity and the size of the funding need.
The bigger story could be capital intensity. CFO Anat Ashkenazi said in April that 2027 capital expenditures will be significantly higher than the up to $190 billion budgeted for 2026, while Bloomberg Intelligence analyst Mandeep Singh said spending could possibly reach $300 billion next year. Goldman Sachs Group Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), and Morgan Stanley (NYSE:MS) are leading the underwritten offerings, while Goldman Sachs is acting as agent for the private placement. Berkshire’s $10 billion deal also adds a notable twist, coming as Greg Abel begins deploying the firm’s record $397 billion cash pile after Warren Buffett (Trades, Portfolio)’s retirement last year.
