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Alphabet announces $80B equity capital raise to expand AI infra and compute

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Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#61

Post by hattmall »

mgfist wrote: post #44
sumoboy wrote: post #37

Earlier quoted context omitted.

I think Google is a bit sandbagging here knowing they have all the data and likely better models hiding. My theory is it's a bit of not disrupting the stock market direction by exposing whose really the boss. If they can do it cheaper, faster, and better, people start asking questions, especially with upcoming IPO's.

This makes no sense. Google is beholden to its own shareholders, not the markets at large. In any case, it's well known that devs in Google have liked anthropic/openai models for coding more than gemini, so unless they're hiding their best models from the people within, I think it's just the case that they're behind.

It's more that they know they can eventually clone any successes the other companies have and steal their market share. Their really is no moat. In a more normal environment they would be buyout candidates but that's a bit too far gone at this point, so you just let them run until they are out of gas and Google can benefit from any advances without upfronting the cost.

Even with anthropics record breaking revenue growth I don't see how the pure AI companies can sustain, but the catch-22 is that any obvious pivot proves that. This puts the more traditional tech companies in position to ride the back of the wave until the growth curve tops.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#62

Post by addaon »

gbnwl wrote: post #19
addaon wrote: post #12

Earlier quoted context omitted.

Why? There’s $80B of dilution from new shares issued, so to keep share prices constant market cap would have to increase by $80B. Simultaneously, there $80B in additional assets on the balance sheet, so if the company was previously correctly valued at $N market cap it would now be correctly valued at $N+$80B market cap, right? My intuition is that capital raises, just like stock buybacks, should be first-order (“mec…

Don't forget that the denominator (total number of outstanding shares) will be increased by this as well. So even if the market cap reacted exactly one to one like you're proposing the per share price wouldn't stay constant necessarily.

That's exactly the point... the total number of outstanding shares increases, as does the capital value. These changes should cancel out.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#63

Post by AndrewKemendo »

ilteris wrote: post #50
AndrewKemendo wrote: post #43

Earlier quoted context omitted.

Both of these tell the actual market position: 1. There’s real profit/value expected in pursuing the full automation of the labor market to the extent that the Board will approve large debts to known allies (BH) who only invest in long term infrastructure. So they are investing in more AI infrastructure with long term capital because they see the payoff in the long term. 2. That also means they aren’t doing market mo…

They already have shitloads corp debt. They don't want to over leverage.

Agreed! Any public debt is going to be chaotic the next few years most likely

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#64

Post by fancyfredbot »

ilteris wrote: post #45
chatmasta wrote: post #9

Earlier quoted context omitted.

You don’t raise money because you’re short on capital. You raise when you’re in a position of power and capital is cheap.

Capital is cheap how? Are you saying they think capital would get more expensive?

Capital is cheap for Google because they are making a lot of money and they have very little debt.

They are considered a very low risk and can borrow for a long time at low rates. They recently issued a 100 year bond.

They seem to have decided to issue equity rather than borrow more. This is probably so that they can maintain the ability to borrow very cheaply in future if necessary.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#65

Post by lemax »

mitchell_h wrote: post #23
bel8 wrote: post #17

Earlier quoted context omitted.

They know Google has a ton of data to train LLMs on. Recently I have been asking YouTube's new AI about some videos ("when is Steam metrics mentioned in the video?" for example), which means they also index videos. This is an unthinkable amount of data. I'm actually impressed at how bad Alphabet is with LLMs since they invented the thing as we know AND have all the data to train on, yet OpenAI and Anthropic are eatin…

I use anthropic's models daily, and sometimes switch to Gemini. Google is losing the marketing front BADLY, but their AI service is surprisingly great. It's far cheaper than anthropic for one. and for my kind of research it's just better.

I'm quite certain that Google's AI services are likely the most used in the world right now by virtue of having the widest distribution. It's in the search box. It's on your Android phone. Just because they aren't the preferred coding or research agent does not mean they are losing - that's a pretty small slice.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#66

Post by JumpCrisscross »

hattmall wrote: post #61
mgfist wrote: post #44

Earlier quoted context omitted.

This makes no sense. Google is beholden to its own shareholders, not the markets at large. In any case, it's well known that devs in Google have liked anthropic/openai models for coding more than gemini, so unless they're hiding their best models from the people within, I think it's just the case that they're behind.

It's more that they know they can eventually clone any successes the other companies have and steal their market share. Their really is no moat. In a more normal environment they would be buyout candidates but that's a bit too far gone at this point, so you just let them run until they are out of gas and Google can benefit from any advances without upfronting the cost. Even with anthropics record breaking revenue gro…

> they know they can eventually clone any successes the other companies have

Google has gone all in on AI. To the point of challenging their own core product. Apple is waiting and seeing. Google is building and distributing, albeit with terrible marketing.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#67

Post by JumpCrisscross »

plmpsu wrote: post #6

Quoting: In addition, Alphabet has reached an agreement to sell $10 billion of stock to Berkshire Hathaway Inc. in a private placement, comprised of $5 billion in Class A Common Stock at a price of $351.81 per share and $5 billion in Class C Capital Stock at a price of $348.20 per share. This investment by Berkshire Hathaway adds to the position it has built since Q3 2025.

It's genuinely interesting to see Google fund this with equity versus debt.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#68

Post by whatever1 »

ycui7 wrote: post #54
whatever1 wrote: post #33

Earlier quoted context omitted.

Nobody has the capital to casually invest 200B PER YEAR, in cash, for multiple years. Literally nobody.

maybe it is wrong to spend 200B every year continuously to begin with.

Also I don’t think any of these companies has handled big capex programs in the past (maybe AWS a bit since Amazon is building things, but it did so incrementally), aka they don’t have the institutional knowledge to manage the risk associated with it.

Semiconductor/ Big Oil/ Rail/ Telco have.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#69

Post by afavour »

It’s difficult to avoid the feeling that a horrible financial reckoning is on the way.

All these big tech firms are spending wildly to make sure they are the one on top at the end of it all. But whoever that ends up being there’s going to be one hell of a lot of fallout underneath them.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#70

Post by ilteris »

fancyfredbot wrote: post #64
ilteris wrote: post #45

Earlier quoted context omitted.

Capital is cheap how? Are you saying they think capital would get more expensive?

Capital is cheap for Google because they are making a lot of money and they have very little debt. They are considered a very low risk and can borrow for a long time at low rates. They recently issued a 100 year bond. They seem to have decided to issue equity rather than borrow more. This is probably so that they can maintain the ability to borrow very cheaply in future if necessary.

Sorry I am not buying into that. In your logic they should issue more debt. Their operating margin is lowest compared to Microsoft and meta. If oil goes to 200 tomorrow their profit margin will be squeezed most along with meta. (Ads) Backlog in cloud does not mean shit imo. They can slow roll it. Matter of fact half of that backlog seems backed by anthropic anyway. So imagine anthropic not making money because of a down turn and going down. Who will pay the backlog? This is exactly why they are diluting their stock instead of issuing more debt, they don't want to put all their eggs in one basket and want to retain capital for such downturn. That's how I read it.
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