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If Alphabet\u2019s record-breaking $85 billion stock sale signals investor appetite for AI-related offerings \u2014 and it does \u2014 we can safely say that investors are voracious.<\/p>\n
Google\u2019s parent company had initially intended to sell a first tranche of $40 billion worth of various equity instruments \u2014 two different classes of shares, plus smaller \u201cdepositary shares\u201d priced to be accessible to a broader range of investors. But the offering was so oversubscribed that it raised $45 billion instead, CEO Sundar Pichai said in a post on X<\/a> on Monday. Among the buyers: Berkshire Hathaway, still known for its love of value investing, picked up $10 billion worth.<\/p>\n Alphabet plans to sell another $40 billion worth next quarter, for $85 billion total.<\/p>\n Even $80 billion would have topped the record for equity offerings previously set by Brazilian oil producer Petroleo Brasileiro SA, which raised $70 billion in 2010, Bloomberg reports.<\/a><\/p>\n Now, it\u2019s true that these investors are buying shares of Alphabet, not shares in a younger, possibly debt-riddled AI startup. Alphabet is a very healthy business: $110 billion in revenue (with high profit margins) in Q1 alone, up 22% year-over-year.<\/p>\n Still, the money from this stock sale is earmarked for AI. \u201cPart of our multi-year investment strategy to meet the AI opportunity ahead and support the demand we\u2019re seeing from enterprises and consumers,\u201d as Pichai described it. At Google I\/O last month, he\u00a0said<\/a>\u00a0the company expects to spend between $180 billion and $190 billion on capital expenditures \u2014 largely on AI infrastructure and data centers \u2014 before the year is out.<\/p>\n The timing matters beyond Alphabet itself. As Anthropic gets ready to go public<\/a>, this enormously successful stock sale is a very good sign for the broader AI IPO pipeline. It indicates that public investors, particularly the deep-pocketed institutional ones, are ready to pony up.<\/p>\n The upcoming SpaceX IPO is expected to smash records for cash raised and valuation, and Anthropic\u2019s deal is expected to do the same, possibly surpassing SpaceX. OpenAI is also waiting in the wings.<\/p>\n But all of this rests on public investors\u2019 appetite \u2014 not just private VCs \u2014 remaining strong, and then staying that way. An unprecedented nearly $8 trillion in AI spending<\/a> has been committed over the next five years. That money has to come from somewhere \u2014 and that somewhere includes individual company revenues, loans, and capital raised through stock sales. Whether public markets have the stomach to absorb that much, for that long, is the question that every AI company eyeing an IPO should be thinking about right now.<\/p>\n<\/div>\n When you purchase through links in our articles, we may earn a small commission<\/a>. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n