If Alphabet’s record $85 billion stock sale is any indication of investor appetite for AI-related products, and it is, then it’s safe to say that investors are hungry.
Google’s parent company originally planned to sell the first tranche of $40 billion worth of various equity products (two different types of stocks and smaller “depositary shares” priced to be accessible to a wider range of investors). But the offering was so oversubscribed that the company raised $45 billion instead, CEO Sundar Pichai said in a post on X on Monday. Among the buyers was Berkshire Hathaway, still known for its love of value investing, with a purchase worth $10 billion.
Alphabet plans to sell another $40 billion next quarter for a total of $85 billion.
Even $80 billion would have surpassed the previous record for stock issuance, set by Brazilian oil producer Petroleo Brasileiro SA, which raised $70 billion in 2010, Bloomberg reported.
Now, it’s true that these investors are buying stock in Alphabet, not stock in a young AI startup that is likely laden with debt. Alphabet is a very healthy company, with sales of $110 billion (high profit margins) in the first quarter alone, up 22% year over year.
Still, the funds obtained from this stock sale will be used for AI. “This is part of a multi-year investment strategy to address future AI opportunities and support demand from businesses and consumers,” Pichai said in a statement. At Google I/O last month, he said the company expects to spend $180 billion to $190 billion in capital expenditures (mainly AI infrastructure and data centers) this year.
Timing is more important than Alphabet itself. As Anthropic prepares to go public, this highly successful stock sale bodes very well for the broader AI IPO pipeline. This shows that retail investors, especially deep-pocketed institutional investors, are ready to pony up.
SpaceX’s upcoming IPO is expected to break records for capital raised and valuation, and Anthropic’s deal is expected to do the same, possibly surpassing SpaceX. OpenAI is also waiting.
However, all of this depends on whether the appetite of ordinary investors, not just private VCs, remains strong and strong. There will be approximately $8 trillion in unprecedented spending on AI over the next five years. That money has to come from somewhere, and that somewhere includes individual company profits, loans, and capital raised through stock sales. Whether the public market has the stomach to absorb that much for that long is a question every AI company considering an IPO should be thinking about now.
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