Google owner Alphabet to sell $80bn in stock to fund AI spending spree
Markets take note as world’s biggest equity fundraiser bids to garner more money than three biggest-ever IPOs combined Kenneth Rogoff: will AI create a permanent underclass? Google’s parent company, Alphabet , has said it plans to raise up to $80bn (£59bn) in equity to fund its
Markets take note as world’s biggest equity fundraiser bids to garner more money than three biggest-ever IPOs combined
Google’s parent company, Alphabet , has said it plans to raise up to $80bn (£59bn) in equity to fund its vast artificial intelligence infrastructure investments, raising further questions over the economics of the AI boom.
The move, the largest equity fundraising ever according to analysts, includes a $10bn share sale to the US investment group Berkshire Hathaway, which was led until last year by Warren Buffett.
Alphabet shares fell as much as 4.4% after Wall Street opened. The stock was among the biggest fallers on the tech-heavy Nasdaq index in New York, which dipped almost 0.5%.
Alphabet, which is behind the Gemini system that has been increasing its share of the AI chatbot market, said it would use the money to expand its “world-class AI compute infrastructure to meet its unprecedented customer demand”.
The California-based company said: “AI is driving an expansionary moment for Alphabet. The company is experiencing strong demand for its AI solutions and services from enterprises and consumers, at levels that are exceeding the company’s available supply. By scaling its investments, the company seeks to expand its foundational infrastructure to support the significant growth opportunity ahead.”
Nicholas Hyett, the lead alternatives analyst at Hargreaves Lansdown, said the planned stock sale was much larger than previous secondary share sales, and would also raise more money than the largest stock market flotations, known as initial public offering (IPOs).
“Alphabet’s $80bn fundraise dwarfs the world’s largest IPOs, often the moment of maximum excitement when companies seek to fill their financial war chests,” he said. “In fact, if successful, it would raise more than the world’s three largest initial public offerings put together – Saudi Aramco raised $25.6bn when it debuted on the Saudi exchange in 2019; Alibaba raised $21.8bn on the New York Stock Exchange in 2014; and SoftBank raised $21.3bn when it listed in Tokyo in 2018.
