Alphabet bulls fought a downtape all day Tuesday, with the company’s plan to sell large amounts of stock to fund its artificial intelligence buildout semi-full. The cloud and search giant late Monday announced plans to raise $80 billion through a stock offering, including a $10 billion investment from Berkshire Hathaway. This is the latest step in aggressive efforts by major technology companies to secure future funding for AI infrastructure. Alphabet said it intends to use the proceeds for “capex to expand our AI infrastructure and global computing.” Selling stock to raise investment capital has traditionally been frowned upon because it dilutes the interest of existing investors. Additionally, Alphabet is seeking to raise half of its capital through a so-called at-the-market (ATM) strategy, in which companies sell newly issued shares in stages on the secondary market. All of this is not ideal for investors. “Stock prices are not going to really go up, because as soon as they start going up, they’re going to release (more) inventory. That’s part of the problem with the ATM program,” Jim Cramer said at Tuesday’s morning meeting. As shareholders, we strongly hope that Alphabet (or any other holding company) funds the investment with its free cash flow. This is more sustainable than raising funds from external sources. The next best scenario is to use debt to avoid diluting existing shareholders. Alphabet recently raised $25 billion through a bond issue in November 2025 and more than $30 billion in February. This time, Alphabet chose the third and least desirable option: selling stock. “You have to realize that a lot of companies are raising cash, and it’s usually not the best time to buy stock,” Jim told CNBC on Tuesday. When Jim returned Tuesday morning, he was surprised to see the stock “so low” and suggested that the news should have weighed on the stock more. Goldman Sachs CEO David Solomon echoed that sentiment in an interview with CNBC at the New York Economic Club on Tuesday. Alphabet stock is “trading extremely well,” given that this is “the largest subsequent transaction in a stock to date.” Mr. Solomon emphasized that it was “reassuring.” The CEO’s comments came as the stock was trying to make up for earlier losses. The Alphabet stock sale plan was another highlight for Goldman Sachs, which was chosen to represent the private placement. Goldman, JPMorgan Chase & Co., and Morgan Stanley were selected as joint bookrunning managers for the underwriting. Last month, it was revealed that Goldman was the lead underwriter for Elon Musk’s SpaceX’s upcoming initial public offering (IPO). AI darlings Anthropic and OpenAI also plan to go public this year or early 2027. By raising capital now, Alphabet may be positioning itself to secure funding while it’s still available. “This is a move you would normally expect from a start-up, not a well-established company whose operating cash flow is expected to be around $215 billion this year,” said Club analyst Zeb Fima. “Maybe the idea is that they can use startup-like capital to support startup-like businesses. After all, Gemini is like a startup within the broader Alphabet portfolio.” GOOGL YTD Mountain Alphabet YTD Although slightly off Tuesday’s lows, shares of Google’s parent company closed nearly 4% lower at just under $362 each. The stock’s near flat trading highs have likely taken a lull as the company posted impressive first-quarter profits in late April, fueled by strong demand for its AI products. This significantly increased Google Cloud’s backlog, proving that the company’s AI investments are improving overall business performance. There’s no denying that companies need to invest in AI to avoid being left behind. In April, Alphabet raised its outlook for capital spending for this year to $180 billion to $190 billion, from its previous forecast of $175 billion to $185 billion. A stock sale plan can help you fund your expenses and preserve cash without taking on further debt. Free cash flow is being squeezed by spending, which is a concern for any megacap. Alphabet said the stock sale plan is part of its goal to “fund investments in a balanced manner while maintaining a strong balance sheet.” “If these investments are successful, we can buy back shares and reverse the dilution effect as the need to invest aggressively begins to wane,” Fima said. “If it doesn’t, there will be bigger problems than the resulting dilution. Considering the stock price collapse, the asking price could end up being pretty good.” The announcement raises important questions for investors. “Why would one of the world’s largest cash generating companies turn to the capital markets for additional funding?” The answer ultimately lies in the unprecedented scale of AI build-out currently underway across the technology industry. “The more you spend, the more you get back. That’s what keeps me[at Alphabet],” Jim said, referring to Nvidia CEO Jensen Huang’s recent comments at Computex about the need for high levels of capital investment around AI. At NVIDIA’s latest earnings call in late May, Huang also said, “It’s very clear that compute is revenue and compute is profit.” Wall Street firm Baird said Monday that Alphabet’s offering is “another indicator of the scale and urgency of building out AI infrastructure, along with the scale of demand.” More broadly, analysts estimate that AI-related debt and equity funding across hyperscalers, AI labs, and neoclouds has exceeded $600 billion in the past two years. The bottom line is that it doesn’t appear that Alphabet is raising money because it’s short on cash, but rather suggests that management believes the AI opportunity is large enough and urgent enough to be able to raise capital with operating cash flow alone.It also suggests that management believes there is a much larger AI opportunity than investors currently appreciate, given its track record (Jim). Cramer’s Charitable Trust is long GOOGL, NVDA. 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