Google plans to raise $80 billion to meet unprecedented AI compute demand; shares erase $340 billion in three days

Shares of Alphabet Inc., the parent company of Google, plunged over 4% on Tuesday after the company announced raising $80 billion through private placement and equity sale. The fundraising comes as global tech companies engage in fierce competition on AI spending. The global hyperscalers plan to spend $750 billion in the current FY on AI infrastructure.

The press release by Alphabet said, “Alphabet Inc. today announced equity offerings totaling $80 billion, in expected aggregate amount, as part of its plan to fund investments in its world-class AI compute infrastructure to meet its unprecedented customer demand”.

While addressing the purpose of the fund raise, the company said that it is experiencing unprecedented demand in AI computing, which requires strong infrastructure. AI is driving an expansionary moment at Alphabet, and it is witnessing demand for its AI products and services, which is beyond its current supply capacity. By seeking these investments, the company intends to expand the foundational infrastructure to support the significant growth in demand.

The $80 billion investments will be raised through a mix of private placement and market offering. A $30 billion underwritten public offering and $40 billion at-the-market, or ATM, offering program for Class A Common Stock and Class C Capital Stock over time, expected to begin in Q3 2026.

During its latest earnings call, the company announced spending $180-$190 billion in capital expenditures to fund the AI infrastructure demand. The company holds a strong operating cash flow of $174 billion and $100 billion in debt across currencies and markets.

Why did Alphabet shares fall?

The rising share prices of AI hyperscalers on the back of strong capex announcements have created a sense of anxiety amongst investors as the question arises about the return on these investments. As companies plan to invest more and more, the profitability and affordability of these investments remain a key concern.