Alphabet plans $80 billion share raise to expand AI infrastructure

WASHINGTON: Alphabet, the parent company of Google, said on Monday it intends to raise as much as $80 billion through stock sales to support a significant buildout of its artificial intelligence infrastructure, including a $10 billion commitment from Warren Buffett's Berkshire Hathaway.

The company said the fundraising would include a $30 billion public stock offering, a $10 billion private sale to Berkshire Hathaway, and an additional $40 billion share sale programme due to begin in the third quarter. Alphabet said most of the money would be used to expand AI-related infrastructure, while about $30 billion from the share sale programme would be set aside for tax liabilities tied to employee share grants.

The announcement comes as Alphabet increases its capital spending. The company expects capital expenditures to reach between $180 billion and $190 billion in 2026, with spending projected to rise further in 2027.

Technology firms step up AI spending

Alphabet's move reflects a wider race among major technology companies to add AI capacity. Amazon, Microsoft, Alphabet and Meta are together expected to spend about $700 billion this year on AI data centres, chips and computing infrastructure as demand for AI services continues to grow.

Google chief executive Sundar Pichai told investors last month that the company is facing near-term limits in available computing capacity.

He said this meant Google was unable to build the required infrastructure quickly enough to match demand. Microsoft has also warned of similar capacity shortages.

Quarterly results and market activity

In the first quarter, Alphabet posted profit of $62.6 billion on revenue of $110 billion, exceeding analysts' expectations and improving sharply from the same period a year earlier. Its shares have gained 18 percent over the last six months.

The broader surge in AI investment is also feeding major stock market activity. SpaceX, owned by Elon Musk, is preparing to begin its IPO roadshow this week with a target valuation of about $1.75 trillion. OpenAI, the developer of ChatGPT, and Anthropic, which makes the Claude chatbot, are also expected to list later this year. Anthropic filed for its initial public offering on Monday.

Goldman Sachs, JP Morgan and Morgan Stanley are handling Alphabet's public offering.