Alphabet is Raising $84.75 Billion to Win the AI Wars. Should Investors Celebrate or Worry?
Written by Justin Pope for The Motley Fool -> Alphabet is issuing stock to help fund its massive AI spending plans. AI seems to be generating positive returns across Alphabet's various businesses. The raise will dilute shareholders, so investors probably don't want to see this
Alphabet is issuing stock to help fund its massive AI spending plans.
AI seems to be generating positive returns across Alphabet's various businesses.
The raise will dilute shareholders, so investors probably don't want to see this become a habit.
Tech giant and Google parent company Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) has spent billions of dollars buying back its stock over the past decade. But Alphabet is reversing course in a big way, announcing a massive $84.75 billion equity offering earlier this month.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
In other words, Alphabet is selling new shares of stock to raise capital to fund its artificial intelligence (AI) investments. Alphabet has primarily funded its AI spending over the past several years with cash flow. Now, the company is pulling out the stops to win the AI war it's waging with other hyperscalers, including OpenAI and Anthropic. Alphabet plans to spend $180 billion to $190 billion this year alone.
However, it's not clear right now whether that's something investors should celebrate or fear. The AI equity raise could have two implications for Alphabet stock .
The AI boom really began to pick up steam in 2023, and you can see how Alphabet's capital expenditures have continued to grow since then. The company developed its Gemini AI models, launched an app to compete with ChatGPT, and integrated Gemini AI across Google Search and other products and services .
