Alphabet plans $80 billion equity raise for AI buildout, with $10 billion from Berkshire Hathaway

Alphabet, the parent company of Google, announced a plan to raise $80 billion through a series of equity offerings to fund its costly artificial intelligence expansion. The package includes a $10 billion private placement with Warren Buffett's Berkshire Hathaway, $30 billion in underwritten public offerings of shares and mandatory convertible preferred stock, and a $40 billion at-the-market program to sell shares gradually starting in the third quarter.

The Berkshire deal

Berkshire Hathaway will purchase $10 billion in Alphabet stock at prices below Monday's closing levels. The investment is split evenly between $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. The move adds to a position Berkshire has been building since the third quarter of last year, which it more than tripled to $16.6 billion as of last month.

This additional purchase underscores that Greg Abel (Berkshire CEO) believes that Alphabet will earn a reasonable return on its AI capex spending even with the firm issuing additional shares.

The equity structure

The remaining $70 billion will come from two channels. A $30 billion tranche will be raised through concurrent public offerings backed by investment banks, split between depositary shares tied to mandatory convertible preferred stock and Class A and C shares. An additional $40 billion at-the-market offering program is expected to launch in the third quarter, giving the company flexibility to sell stock over time.

AI demand driving spending

Alphabet stated that demand for its AI solutions and services from enterprises and consumers is exceeding its available supply. The company is trying to capitalize on growing appetite for its homegrown AI chips, known as tensor processing units, or TPUs, which have become a key alternative to Nvidia's processors.

The company is experiencing strong demand for its AI solutions and services from enterprises and consumers, at levels that are exceeding the company's available supply.

Alphabet CFO Anat Ashkenazi said in April that capital expenditures in 2027 will be significantly higher than the up to $190 billion budgeted for 2026. Bloomberg Intelligence analyst Mandeep Singh believes spending could reach $300 billion next year.

IPO market context

The fundraising arrives as several AI-focused companies prepare to go public. SpaceX, Anthropic, and OpenAI have all filed for initial public offerings. Analysts noted that Alphabet's massive equity raise could compete for the same investor capital.

There's only so much capital you can allocate, even in the public markets.

Troy Hooper, co-head of equity capital markets for the Americas at Mergermarket, said US tech giants view underinvestment in AI as an existential risk and over-investment as merely expensive. Alphabet shares were down about 2 percent in after-hours trading following the announcement.