Alphabet seeks $80 billion as Berkshire backs AI expansion with $10 billion investment

Alphabet plans to raise up to $80 billion through a series of equity offerings, including a $10 billion investment from Berkshire Hathaway, as the Google parent accelerates spending on artificial intelligence infrastructure and cloud computing.

The company said Berkshire Hathaway will purchase $10 billion worth of Alphabet shares through a private placement. The investment will comprise $5 billion in Class A common stock priced at $351.81 per share and $5 billion in Class C capital stock priced at $348.20 per share, both below Monday's closing prices.

The transaction further expands Berkshire's exposure to Alphabet. Last month, Berkshire disclosed that it had more than tripled its stake in the company, with the holding valued at approximately $16.6 billion, making it one of the conglomerate's largest equity investments.

Alphabet said it also intends to raise an additional $30 billion through concurrent public offerings backed by investment banks. The fundraising will be split evenly between depositary shares linked to mandatory convertible preferred stock and offerings of Class A and Class C shares.

In addition, the company plans to launch a $40 billion at-the-market stock offering programme during the third quarter, allowing it to gradually sell Class A and Class C shares over time.

The fundraising effort comes as Alphabet increases investment in artificial intelligence infrastructure, including data centres, custom chips and AI-powered business tools. In April, the company raised its annual capital expenditure forecast by $5 billion to a range of $180 billion to $190 billion.

Alphabet said demand for its AI products and services from businesses and consumers is exceeding available capacity, prompting the need for additional investment.

The company has also relied heavily on debt financing. Alphabet said it raised more than $85 billion in debt across six currencies and markets over the past year, taking its total debt balance to more than $100 billion.

Market participants viewed Berkshire's participation as a vote of confidence in Alphabet's long-term strategy.

Steven Check, president and chief investment officer of Check Capital Management, said Berkshire is regarded as a desirable long-term shareholder for companies.

Bill Stone, chief investment officer at Glenview Trust Company, said the additional investment suggests Berkshire Chief Executive Officer Greg Abel believes Alphabet can generate reasonable returns from its AI-related capital spending despite issuing additional shares.

Alphabet shares were down about 2% in after-hours trading following the announcement.