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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

#111

Post by swyx »

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.

google stock is $376 a share rn. berkshire got a favorable discount here. is this... normal? they didnt have an obligation to offer it to the market to find the best price?

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

#112

Post by hustwindmaple »

ilteris wrote: post #70
fancyfredbot wrote: post #64

Earlier quoted context omitted.

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 d…

They've already issued $80B in 6 markets/currencies. How much more do you think they can raise at a decent rate? I think they might issue more next year.

Issuing new equity might be a financial engineering experiment. No other mag7 has tried it. Plus they got BH name on the plate.

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

#113

Post by topkai22 »

thisisauserid wrote: post #110
Fire-Dragon-DoL wrote: post #109

This means they are buying more hardware and us gamers have to suck it up for 10 more years?

They do buy a ton of Nvidia but they seem to want to make their own chips more and more.

Which will take up fab capacity all the same. All the chips come out of the same TSMC (or possibly Intel) fabs

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

#115

Post by pm90 »

swyx wrote: post #111
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.

google stock is $376 a share rn. berkshire got a favorable discount here. is this... normal? they didnt have an obligation to offer it to the market to find the best price?

if they sold that much in the open market it would probably decrease the price

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

#116

Post by topkai22 »

an0malous wrote: post #100
afavour wrote: post #69

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.

Especially because LLMs have no moat and they’re strategy is basically “we’ll figure out AGI first”

I feel there is a strong argument that if we described the capabilities of agentic systems today to someone from 2002, they’d say we’ve achieved AGI. It’s just not as impressive as we thought it would be.

At least not yet.

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

#117

Post by simpsond »

swyx wrote: post #111
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.

google stock is $376 a share rn. berkshire got a favorable discount here. is this... normal? they didnt have an obligation to offer it to the market to find the best price?

Large block trades happen off exchange often. Secondaries like this are common enough.

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

#118

Post by SOLAR_FIELDS »

jgalt212 wrote: post #106
enos_feedler wrote: post #34

Earlier quoted context omitted.

who cares about marketing when you have distribution? Probably a smart move to pump dollars into the product and not the marketing.

in high margin businesses, customer acquisition is everything.

If your product becomes commoditized, it’s no longer a high margin business

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

#119

Post by marcus_holmes »

bel8 wrote: post #17
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.

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…

Kodak problem. Kodak invented the digital camera but their revenue came from making photographic film. They were unable to take advantage of their invention because it would cannibalise their revenue. That didn't stop other people and the revenue died anyway.

Google's main revenue is ads based on search. LLMs are a competitor to search. Creating better LLMs will cut into search volumes.

In any large organisation this is extraordinarily difficult to manage - they have to incentivise the new tech that is actively harming the current revenues, while maintaining as much of the old revenues as possible, without creating internal conflict between these two parts of the organisation that will kill it.

Though in fairness to Google they do seem to realise this and are trying to adapt - they're letting the LLM folks mess with search. It'll be interesting to see how this goes.

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

#120

Post by jamestimmins »

JumpCrisscross wrote: post #67
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.

My first thought was my finance professor telling us that companies always raise with equity when they think their equity is overvalued.
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