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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

#121

Post by monkpit »

onlyrealcuzzo wrote: post #80
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 wouldn't be surprised if Google's logs alone are a substantial portion of all data created daily...

Do they even do logging in the traditional sense? Surely they have some bespoke googly solution.

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

#122

Post by protocolture »

deathanatos wrote: post #108
protocolture wrote: post #93

Earlier quoted context omitted.

Hey 3 hour old account, how will we keep you accountable when they successfully IPO? Like I am a downer on these companies too but idiots are lining up to buy.

They are stating they believe they're one of like the top 10 or 20 biggest companies in the world , across all industries . The statement is ludicrous. … but as you say, idiots are lining up.

The market can stay irrational longer than you can stay solvent or whatever.

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

#123

Post by skybrian »

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?

More money for less stock, because Google’s stock has gone up in price. By contrast, a stock buyback makes sense when the stock is cheap.

So I guess Google doesn’t think their stock is particularly cheap, but Berkshire Hathaway wants to buy more anyway. (At a slight discount.)

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

#124

Post by sethops1 »

panarky wrote: post #97
JumpCrisscross wrote: post #67

Earlier quoted context omitted.

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

It's also interesting watching Alphabet buy back $100 billion of stock over the last two years, when the price was half what it is today, only to turn around and sell shares now at the higher price. I know GAAP accounting won't recognize any capital gain on these treasury operations, but from an economic standpoint this financial judo creates a lot of value for existing shareholders.

"Buy low, sell high" isn't exactly financial manipulation.

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

#125

Post by mandeepj »

SOLAR_FIELDS wrote: post #118
jgalt212 wrote: post #106

Earlier quoted context omitted.

in high margin businesses, customer acquisition is everything.

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

> If your product becomes commoditized

Depends on the product - whether protein bars, salty chips, cellular service, or IPhone or something else. If your product has a flavor, it’s never going to get commoditized. Coke still tastes better than Pepsi.

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

#126

Post by ip26 »

jamestimmins wrote: post #120
JumpCrisscross wrote: post #67

Earlier quoted context omitted.

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.

You’d think Berkshire would be at least passingly aware of that principle, though.

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

#127

Post by exabrial »

Question from an outsider: my perception is Google has lost $80b in excessive spending on teacups. I never thought I'd see them attempt to raise money, seems like they've always had an unlimited pile of it. Why is this necessary for them?

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

#128

Post by missedthecue »

exabrial wrote: post #127

Question from an outsider: my perception is Google has lost $80b in excessive spending on teacups. I never thought I'd see them attempt to raise money, seems like they've always had an unlimited pile of it. Why is this necessary for them?

If they can issue shares at ~30x earnings and deploy it in an accretive way, what is the argument against doing this? It's incremental ROIC below your cost of capital. One of the smartest things you can do in business.

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

#129

Post by aorloff »

exabrial wrote: post #127

Question from an outsider: my perception is Google has lost $80b in excessive spending on teacups. I never thought I'd see them attempt to raise money, seems like they've always had an unlimited pile of it. Why is this necessary for them?

It would be prudent, not necessary.

Capital raising is best done when markets are favorable, and Alphabet has the ability to choose how and when to raise.

Recall the froth of follow-on offerings hot circa 2000

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

#130

Post by wrsh07 »

marcus_holmes wrote: post #119
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…

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…

This is a sensible-seeming take at first blush, but it doesn't hold up to any scrutiny (or maybe my scrutiny is faulty - you tell me!)

Sundar and many of his executives have certainly read or heard of The Innovator's Dilemma, and I expect they're all moderately paranoid that it will be their downfall.

Also, that's not it. Google has a great ai app called Gemini where they have at various points hosted the top ai image generation model (certainly for speed, and for a while for accuracy) and have innovated with features like deep research

They are monetizing their ai conversations more effectively than OpenAI could dream of via ads and chat in Google search.

They are heavily investing in compute and talent.

When they've added llm results to Google search it has _increased_ engagement and re-engagement.

What part of the competition are they blissfully ignoring?

(I have counter arguments to some of these points, but I would rather hear other people's)

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