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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

#241

Post by JacobAsmuth »

jsnell wrote: post #18
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…

But stock buybacks shouldn't be price-neutral by default? The entire point is to increase the unit price of the remaining shares. And in this specific case, selling shares to Berkshire at a 5% discount has a pretty clear signalling effect.

You watching all your neighbors sell their beachfront property right before hurricane season: "This isn't really a signal because these transactions are all zero-sum"

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

#242

Post by JacobAsmuth »

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.

No they don't lol. Their debt to equity ratio is 0.19. For reference Berkshire is 0.18 and Microsoft is 0.25

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

#243

Post by tjwebbnorfolk »

HWR_14 wrote: post #74
tjwebbnorfolk wrote: post #56

Earlier quoted context omitted.

Ok but GOOG also has a ~$70B per year stock buyback program for that. It's a little goofy to be buying back and issuing $80B of new shares at the same time.

SpaceX has been buying back employees stock and issuing new stock to investors. So have a lot of private companies.

Ok but Google is not doing that, they are buying from the public market and issuing to the public market (minus the $10B berkshire issue)

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

#244

Post by ksec »

All these money spent on AI is simply mind boggling. Google expect to spend $1 Trillion over next few years. And that is not counting Amazon, Facebook, Microsoft, Apple, Tesla etc.

I would have thought we have over built Datacenter before even AI came. There are enough Datacenter Rack space that replacing 5 - 8 years old server to newer 256 Core CPU would have increased their CPU per Rack by factor of 4 - 5. Saving significant space for future growth.

Instead we are so behind in Rackspace we are now building out Datacenter faster than ever.

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

#245

Post by wrsh07 »

keeda wrote: post #233
wrsh07 wrote: post #232

Earlier quoted context omitted.

> I think their revenues and profits and dominance will be much lower than what they are today While your linked post was explicitly about ads, this line wasn't and is just baseless If you think that (the quoted line) you should short Google (haha you will lose all your money even if you're right, market...irrational...solvent) Search is going to be fine. It's about half their revenue. Display is another large chunk…

> While your linked post was explicitly about ads, this line wasn't and is just baseless I mean, the ad business is still by far the largest chunk of their whole business, which is why I think their overall revenues, profits and dominance will decrease ¯\_(ツ)_/¯ Display is another good example of why. Like half (?) of it is YouTube, which will be fine, but the rest comes from non-first party properties, which are alr…

My hot take here is there searches will drop some but overall the thing we know as search will be fine because it will evolve. And revenue will go up.

I mean, the product might not be called Google search, but the thing that Google search transforms into will likely make more money than it does today and my bear case is that it would still make >80% of today's watermark.

Also Google's going to grow auxiliary businesses around AI that will change the balance of their assets dramatically (waymo is ~nothing right now, cloud is growing well, and there's no reason Google shouldn't be able to produce a top coding model for speed if not frontier level)

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

#246

Post by djhn »

wrsh07 wrote: post #220
keeda wrote: post #153

Earlier quoted context omitted.

I agree that all of today's CEOs have learned from history and are paranoid about disruption, and I agree that Google is pivoting effectively and will even thrive in the AI era, given their technical and distribution advantages... but I think their revenues and profits and dominance will be much lower than what they are today: https://news.ycombinator.com/item?id=47957708

This take overlooks most of the work that Google has been doing in the past decade. Have you seen their Cloud business? Moreover, Google has continued to drive search growth since ChatGPT arrived and is executing competently. Their models are good (not great), but they have enough compute and one of the best ML-focused chips such that they aren't beholden to Nvidia (instead, they're beholden to fabs: tsmc - this is a…

On TSMC: what is your reasoning or source of belief that ”extracting as much valie as they can” is against TSMC’s nature? Is there some charity charter or non-profit governance arrangement I’m not aware of? Or are you saying that geopolitics affects their pricing power?

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

#247

Post by dnnddidiej »

JacobAsmuth wrote: post #240
dnnddidiej wrote: post #167

Earlier quoted context omitted.

But they are about to set it on fire? But null hypothesis p=0.3 or something right?

Set it on fire? I'm confused what your model of Google leadership is. Do you think they're being duped? Or controlled in some way? What is your theory of mind for Sundar's decision making process here. That he's committing fraud? Because the obvious answer is that he has compelling financial data telling him that this $80B now will produce a positive return on investment in the future. But you of course seem to disag…

Not me I have no dog in the fight, I am trying to mindread the market.
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