Capital raise at ATH

Alphabet Inc. ( Google’s parent) announced its latest major capital raise yesterday: an $80 billion equity capital raise to fund AI infrastructure and compute expansion. The use of funds: Primarily to scale AI compute infrastructure amid “unprecedented customer demand” for AI solutions. This supports Alphabet’s aggressive 2026 capital expenditure (capex) plans of $180–190 billion (roughly double 2025 levels), focused on data centers, power, and related infrastructure. The details of the capital raise are: (1)  $10 billion private placement to Berkshire Hathaway: $5 billion in Class A common stock at $351.81 per share and $5 billion in Class C capital stock at $348.20 per share (both priced below the prior closing price). (2)  $30 billion in underwritten public offerings: This includes $15 billion in depositary shares representing mandatory convertible preferred stock. (3)  $40 billion at-the-market offering program for Class A and Class C shares, expected to begin in Q3 2026. Alphabet’s market cap prior to the announcement was $4.5Tn. Despite having an enormous amount of Operating Cash Flow, hyperscalers and particularly Alphabet, are investing an unprecedented amount of capital into AI infrastructure as Debt appears to be no longer enough; selling capital at this valuations makes a lot of sense for them. Currently, AI related companies amounts to 10% of the investment grade universe, and as you can see below, about 8.3% of the US HY market. If this strategy is copied by other tech companies, it may imply the end of stock buybacks, as it may no longer make sense to buy shares back, to reissue them. And if there are no buybacks, they are eliminating an incredible amount of support to this market. Companies may be turning into net sellers in this market at all time highs. What are they telling us?

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