Alphabet (Google) (NASDAQ:GOOG) is raising equity capital in a private placement. The proposal is for $80 billion in funding to help fuel artificial intelligence development.
Shares of the company are down marginally in after-hours trading as markets assess the dilutionary impact of the equity sale.
As part of the deal, Berkshire Hathaway has committed to provide $10 billion of the amount. Berkshire recently saw the retirement of Warren Buffett, the legendary founder and keen investor, who stepped down as CEO at the start of this year. He remains Chairman of the Board at the age of 95.
Having Berkshire anchor the deal enhances the offering’s overall credibility.
The funding is outlined as follows:
- Concurrent underwritten offerings: $30 billion underwritten public offerings, consisting of: $15 billion in depositary shares representing mandatory convertible preferred stock; and $15 billion in Class A Common Stock and Class C Capital Stock; and
- At-the-market offering: $40 billion at-the-market, or ATM, offering program for Class A Common Stock and Class C Capital Stock over time, expected to begin in Q3 2026.
The Berkshire portion is allocated as follows: $5 billion in Class A Common Stock at $351.81 per share and $5 billion in Class C Capital Stock at $348.20 per share.
Alphabet says that AI is an “expansionary moment” for the company. Gemini, Alphabet’s AI segment, has been well received but the competition is intense with other firms like Anthropic filing for an IPO and OpenAI poised to do the same, access to capital is key differentiator as the AI market evolves.
At the same time, Google Cloud is growing dramatically due to AI. The company reports a backlog of over $460 billion.
Alphabet expects 2027 capital expenditures to increase significantly from 2026, with spending currently at around $180 billion. The company is effectively going all in on AI as it anticipates a massive transition away from current search-based activity that drives advertising to a potential model that includes subscriptions along with some advertising-generated income.