Google\u2019s parent company Alphabet, Inc. is engaging in some unusual and creative equity-raising practices for a large, publicly traded company. Long story short: it\u2019s raising gobs of investor money that it can put toward expanding its footprint in AI hardware.<\/p>\n
It plans to raise $80 billion via new \u201cequity offerings\u201d per Bloomberg<\/a>. That includes $40 billion in new stock dripped into the stock market starting in the third quarter (meaning probably starting in July). For high rollers, Alphabet is offering $30 billion in special underwritten shares along with \u201cmandatory convertible preferred stock,\u201d backed by Goldman Sachs, JPMorgan, and Morgan Stanley.<\/p>\n And for good measure, Berkshire Hathaway is putting up $10 billion for shares. Expect an SEC filing shortly to clarify what kind of terms they\u2019re getting.<\/p>\n And it\u2019s coming at a noticeably inopportune time for anyone else competing for investors hungry for AI exposure. SpaceX<\/a>, Anthropic<\/a>, and possibly<\/a> OpenAI have filed for initial public offerings, either confidentially in the case of Anthropic, or by releasing a big old prospectus<\/a> like SpaceX.<\/p>\n In other words, if you squint, it sort of looks like Google is playing hardball with SpaceX and the others. Public offerings benefit from investors with bulging pockets, and Google is coming along and making their pockets bulge slightly less. As Bloomberg\u2019s in-house analyst Mandeep Singh says in the Bloomberg article, \u201cThere\u2019s only so much capital you can allocate, even in the public markets.\u201d\u00a0 <\/p>\n Is it actually zero sum? Does competing in the equity markets on such a huge scale at such an auspicious moment dampen enthusiasm for the other companies\u2019 IPOs? When you consider that investors (Robinhood users, say) can and do routinely pull money out of other stocks in the stock market to invest in an IPO, and this sort of thing is generally priced in (not to mention the fact that SpaceX is being fast-tracked into indexes like Nasdaq<\/a>), then probably not all that much.<\/p>\n And I also doubt that large institutional investors gobbling up the bank-backed preferred stock are putting all their eggs in one basket. They can probably invest in all of the above too if they want.<\/p>\n However, the Berkshire part of the deal is a single, massive, concerted decision that genuinely siphons off $10 billion in capital investment that might have gone to these IPOs.<\/p>\n And this is all, according to Bloomberg, an effort to turbocharge Google\u2019s chip-making operation. Its tensor processing units or TPUs have been competing internally with Nvidia<\/a>\u2019s GPUs<\/a> for a while now, and could soon come for a piece of the AI processing pie if a critical mass of AI companies take an interest. Raising $80 billion is an effort to double down\u2014or maybe triple or quadruple down\u2014on Google\u2019s AI silicon ambitions.<\/p>\n","protected":false},"excerpt":{"rendered":"Google\u2019s parent company Alphabet, Inc. is engaging in some unusual and creative equity-raising practices for a large, publicly…\n","protected":false},"author":2,"featured_media":58555,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[24,3251,1883,132,1429,3831],"class_list":["post-58554","post","type-post","status-publish","format-standard","has-post-thumbnail","category-google","tag-ai","tag-berkshire-hathaway","tag-equity","tag-google","tag-google-ai","tag-ipos"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/58554","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=58554"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/58554\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/58555"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=58554"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=58554"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=58554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}