Alphabet aims for $85 billion after four-week losing streak

1 month ago alphabet exceeded temporarily Nvidia By market capitalization. Stocks have been trending lower since then, on pace to end a four-week streak of declines, the longest in more than a year.

This comes as Alphabet faces a market mood as it seeks $85 billion in new capital to fund its artificial intelligence buildout. Google has been a popular mega-tech name on Wall Street over the past year, but the story is met with skepticism as the deep-pocketed company seeks more funding for infrastructure and advancements in AI models that compete with products from Anthropic and OpenAI.

Dan Niles, founder of Niles Investment Management, said in an interview that “we never thought Google would need to go to the public markets to finance its spending.”

Niles said Alphabet has “the best stack in all of AI” at scale, citing its model, tensor processing units (TPUs), Android distribution, cloud business and search advantages. That strength, he argued, is what makes the equity raise so impressive.

Like its hyperscaler peers, Google is spending historic amounts on new data centers and the chips and systems needed to meet the surge in demand for AI computing. In April, the company raised its full-year capital spending outlook to as much as $190 billion from $185 billion.

before announcing on Monday that it would raise $80 billion in a stock sale, including a $10 billion investment from. Berkshire Hathawayand pushed that number to $85 billion on Wednesday, with Google already securing more than $55 billion in new debt since November. Melius Research predicts that Google’s free cash flow will become negative in the coming years as it increases capital spending on AI.

Until recently, investors were all for it. Despite a four-week decline, Alphabet stock has risen more than 120% over the past year, reaching its all-time high in mid-May. But the company’s underwhelming performance at last month’s Google I/O and concerns that the company was dangerously far behind in its AI coding models contributed to the stock’s recent drop.

Another big reason Alphabet is rushing to enter the stock market is an IPO.

SpaceX heads to the Nasdaq market next week, aiming to raise a record $75 billion in its first stock sale. Anthropic has confidentially filed for an initial public offering, and OpenAI is expected to do so soon. The largest IPO in history was alibaba’s It is expected to raise $21.8 billion in 2014. Each of the three upcoming mega offers could bring in multiple times that amount of revenue.

Alphabet may be looking to tap the capital markets now to shore up its balance sheet before investors are asked to spend large amounts of money on new AI products. Niles said that regardless of how much money is being poured into the AI ​​trade, capital is not infinite.

Alphabet is presenting the increase as a way to maintain financial flexibility while accelerating spending. Executives have told investors that strong access to global debt and equity markets is becoming a strategic advantage given the scale of demand for AI.

Chief Executive Officer Sundar Pichai said in an investor presentation that demand from businesses and consumers “significantly exceeds” Alphabet’s available supply, calling it “a clear indicator of Alphabet’s unique opportunity.”

“Supporting all of this at scale for users while serving businesses and developers around the world requires huge computing investments,” Pichai said.

Pichai said that after Alphabet’s capital spending more than doubled this year, he expects another “significant increase” in 2027, with the overwhelming majority going to technology infrastructure.

CFO Anat Ashkenazi said the stock issuance is a “strategic and proactive move to optimize our financial flexibility and maximize long-term shareholder value creation.”

Alphabet’s pitch is that that spending is already showing up in its business, particularly in the cloud.

Google Cloud’s first quarter revenue increased 63% year-over-year to a record $20 billion, and its order backlog nearly doubled from the previous quarter to more than $460 billion. Ashkenazy said AI solutions are making the biggest contribution to cloud growth for the first time, with 75% of cloud customers using Alphabet’s AI products.

The company is also trying to prove that its scale makes every new dollar in AI infrastructure more valuable than its competitors.

Alphabet said it has reduced Gemini’s service costs by 78% since 2025, and Ashkenazy said hardware and engineering improvements have reduced the cost of core AI responses by more than 30% since the launch of Gemini 3. These efficiency gains are critical as companies continue to increase spending on inference, model training, and AI coding.

Meanwhile, the company’s AI products are also gaining popularity. Pichai said in his presentation that AI Overviews now has more than 2.5 billion monthly users, and AI Mode has more than 1 billion monthly users in its first year since launch.

Analysts at HSBC said in a note that more capital raisings are likely across the hyperscaler industry as major players try to keep up with demand and keep pace with rivals.

goldman sachs David Solomon, the company’s CEO behind the Alphabet deal, suggested the stock offering will be a test of sorts for the market, calling it “the first real, tangible data point” of these big AI stock sales.

He cautioned that although there is plenty of capital around the world to cover current funding levels, sentiment could change quickly, especially given the unprecedented amount of funding being raised.

“We’re definitely in a time where there’s more greed than fear,” Solomon told CNBC’s Leslie Picker in an interview at the New York Economic Club this week. “When capital is available, if you are consuming capital and it is available, take capital.”

—CNBC’s Jennifer Elias contributed to this report.

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