Alphabet Raises $85 Billion for AI: A Historic Record

Alphabet Sets Records with Its AI Fundraising

Alphabet, the parent company of Google, has achieved a historic fundraising milestone by selling shares for a total of $85 billion. This operation reflects the enormous appetite of investors for projects related to artificial intelligence. Initially, Alphabet had planned to raise $40 billion in equity instruments, including two classes of shares and smaller "depositary shares" accessible to a wide range of investors. However, in response to demand far exceeding expectations, the company ultimately raised $45 billion, as announced by CEO Sundar Pichai on X.

Among the investors, Berkshire Hathaway stood out by purchasing $10 billion worth of shares, highlighting its interest in value investing. Alphabet plans to sell another tranche of $40 billion in the next quarter, bringing the total to $85 billion.

An Unprecedented Fundraising

Even a fundraising of $80 billion would have been enough to break the previous record for equity offerings, set by Brazilian oil producer Petroleo Brasileiro SA with $70 billion in 2010, according to Bloomberg. Unlike a potentially risky AI startup, Alphabet is a financially solid company, with revenues of $110 billion in the first quarter, up 22% from the previous year.

The funds raised are intended for AI. "This is part of our multi-year investment strategy to seize the upcoming AI opportunity and support the demand we see from businesses and consumers," Pichai explained. During the Google I/O conference, it was revealed that the company plans to spend between $180 billion and $190 billion on capital expenditures, primarily for AI infrastructure and data centers, by the end of the year.

A Strong Signal for the IPO Market

This successful fundraising comes at a crucial time for the tech sector. As Anthropic prepares to go public, this success is a positive signal for the AI IPO market. It demonstrates that public investors, particularly institutional ones, are ready to invest heavily.

The upcoming IPO of SpaceX is also expected to set new records in terms of funds raised and valuation, with Anthropic's deal potentially following the same path, or even surpassing SpaceX. OpenAI is also waiting for its turn.

However, all of this depends on the ability of public investors to maintain their interest. An unprecedented amount of nearly $8 trillion is expected to be spent on AI over the next five years. This money will need to come from various sources, including corporate revenues, loans, and capital raised through stock sales. AI companies considering an IPO must ask themselves whether public markets can absorb such a large amount of funds over an extended period.