TLDR
- Alphabet plans to raise $80 billion through equity offerings to fund AI infrastructure expansion
- Berkshire Hathaway will invest $10 billion via private placement in Class A and Class C stock
- The raise includes $30 billion in public offerings and a $40 billion at-the-market program in Q3
- GOOGL dropped around 2% after-hours following the announcement
- Jim Cramer and short-seller Jim Chanos both raised concerns, citing dilution risk and Alphabet’s existing $126 billion cash pile
Alphabet announced Monday it is looking to raise $80 billion through a series of equity offerings, its biggest capital raise yet, aimed at funding a massive expansion of its AI infrastructure.
The stock fell roughly 2% after the bell. Alphabet closed Monday at $376.37, down 1.04% on the day, before sliding further in overnight trading.
The company raised its annual capital spending forecast in April to between $180 billion and $190 billion — a $5 billion increase — citing demand for AI-driven computing that is outpacing its current supply.
Berkshire Hathaway is getting in on the deal with a $10 billion private placement. That breaks down as $5 billion in Class A stock at $351.81 per share and $5 billion in Class C stock at $348.20 per share — both priced below Monday’s close.
This adds to a position Berkshire has been building since Q3 last year. Last month, Berkshire said it more than tripled its Alphabet stake, which had grown to $16.6 billion — one of its largest common stock holdings.
“All companies are thrilled when Berkshire takes positions, because it is the kind of shareholder that companies like to have,” said Steven Check, president and CIO of Check Capital Management.
How the $80 Billion Breaks Down
The capital raise is structured across three channels. First, $10 billion goes to Berkshire via private placement. Second, $30 billion comes from concurrent public offerings — split evenly between depositary shares tied to mandatory convertible preferred stock and Class A and C shares.
Third, Alphabet plans a $40 billion at-the-market offering program launching in Q3, which lets the company sell stock gradually over time rather than in one large block.
Alphabet already has over $100 billion in total debt after raising more than $85 billion across six currencies and markets over the past year.
Wall Street Pushes Back
Not everyone is enthusiastic. Jim Cramer took to X to warn that the ATM offering “will turn the stock into a real slog if not careful.” He argued that selling stock gradually puts ongoing pressure on the common stock price.
Short-seller Jim Chanos was more direct. He pointed out that Alphabet held $126 billion in cash and marketable securities as of March 31, questioning why the company needs to raise this much capital at all.
Supporters of the deal pointed to Berkshire CEO Greg Abel’s decision to add to the position as a sign that the AI spending is expected to generate reasonable returns.
“This additional purchase underscores that Greg Abel believes that Alphabet will earn a reasonable return on its AI capex spending,” said Bill Stone, CIO at Glenview Trust Company.
Alphabet said it is seeing demand for AI solutions from both enterprises and consumers “at levels that are exceeding the company’s available supply.”
GOOGL is up 20.25% year-to-date, just behind the Nasdaq 100’s 21.06% gain over the same period. Over the past six months, the stock has risen 19.52%, and it is up 119.15% over the past year.
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