OpenAI · Google · Elizabeth Warren · Gemini · The Guardian Technology
Google owner Alphabet to sell $80bn in stock to fund AI spending spree
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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.
Key facts
- The full $80bn is less than 2% of Alphabet’s mammoth $4.6tn market cap … But, however it’s structured, one thing is abundantly clear
- Alphabet had said previously capital expenditure was expected to reach $180bn to $190bn this year, with another significant step up in 2027
- The fundraising includes a $30bn initial raise alongside the $10bn from Berkshire, and a $40bn flexible drip-feed mechanism that can be used gradually over time, not earmarked for AI investment
- In its filing, Alphabet explained that half of the $80bn would be used to “scale AI infrastructure and global compute”, with $40bn set aside to cover “an administrative change to how it meets tax
Summary
The move, one of the largest equity fundraisings ever, includes a $10bn share sale to the US investment group Berkshire Hathaway, which was led until last year by the investment guru Warren Buffett. 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. However, such a huge fundraising is also a warning to the markets that for all the many billions of dollars thrown at AI infrastructure, meaningful returns to investors have so far been limited.