Alphabet to raise $80bn from share sales to fund AI spending splurge – business live

Introduction: Alphabet to raise $80bn for AI spending

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The economics of the AI boom are back in focus today, after Google’s parent company Alphabet said it plans to raise up to $80bn in equity to – in part – fund its vast AI infrastructure investments.

The move is one of the largest equity raisings ever, and includes a $10bn share sale to investsment giant Berkshire Hathaway

Alphabet, whose Gemini AI system has been growing its share of the AI chatbot market, says it will use the money to expand its “world-class AI compute infrastructure to meet its unprecedented customer demand.”

The company says:

AI is driving an expansionary moment for Alphabet. The company is experiencing strong demand for its AI solutions and services from enterprises and consumers, at levels that are exceeding the company’s available supply. By scaling its investments, the company seeks to expand its foundational infrastructure to support the significant growth opportunity ahead.

But, such a huge fundraising is also a warning to the markets that, for all the many billions of dollars thrown at AI infrastructure, meaningful returns are limited.

Jim Reid, market strategist at Deutsche Bank, told clients that Alhabet is reminding investors of the “unprecedented scale of the AI spending boom”, adding:

“Funding of the AI capex boom is becoming an increasingly key topic for markets.”

The decision to tap Berkshire Hathaway is eye-catching too. Under the now-retired Warren Buffett, Berkshire made a habit of stepping in to provide important, and lucrative, funding for companies who really needed cash, such as the famous $5bn investment into Goldman Sachs at the height of the financial crisis.

In its filing, Alphabet explains that half the $80bn will be dedicated to “scale AI infrastructure and global compute”, with $40bn set aside to cover “an administrative change to how it meets tax obligations associated with vesting of employee equity awards”.

Alphabet is also tapping investors before some of its largest AI rivals attempt to join the stock market.

Yesterday, Anthropic -which makes the Claude chatbot – said it had filed confidentially for an initial public offering on the US stock market.

Anthropic is now valued at $965bn after raising $65bn in funding, meaning it has leapfrogged OpenAI to become the world’s most valuable startup.

The agenda

9.30am BST: Bank of England mortgage approvals and consumer credit data
9.45am BST: Treasury Committee session on student loans
10am BST: Eurozone inflation report for May
3pm BST: US JOLTS vacancies report
3pm BST: Bank of England governor Andrew Bailey: Oral evidence to the Lords Economic Affairs Committee

Key events

Alphabet shares down slightly

Shares in Alphabet have dipped in pre-market trading, as investors digest its planned $80bn stock sale.

They’re down 1.8% at $369.63.

That’s a modest reaction, showing that traders hasn’t been spooked.

And that’s because the $80bn stock sale won’t land on the market in one go. The $40bn “at-the-market (ATM) offering” will raise money for Alphabet over time, as shares are trickled onto the market gradually.

The $30bn of shares sold though the “aggregate underwritten offerings” will be held by the investment banks who underwrite the deal. They wouldn’t dump the stock on the market in one go either.

Plus, Berkshire Hathaway could be expected to hold onto its new $10bn stake, as it has been investing in Alphabet for a while.

Nearly a fifth of young people set to be unemployed next year as AI hits jobs market

Youth unemployment in the UK is set to hit almost 18% next year, as the rollout of AI systems destroys some entry level jobs.

The British Chambers of Commerce has predicted that the UK’s youth unemployment rate will rise to 16.9% this year, up from 16.1% in the last quarter of 2025, and then hit 17.88% in 2027.

That would mean that almost a fifth of young people would be out of work next year.

The BCC blamed higher taxes, minimum wage rises and the rise of AI, saying:

Youth unemployment remains an area of concern as labour costs and AI erode entry level jobs. It is expected to be 16.9% in 2026, rising to 17.8% in 2027.

With firms facing squeezed margins because of input costs and minimum wage increases, growth in average earnings is forecast to ease from 3.7% by Q4 2026 to 3.3% by the end of 2027.

Last week, former health secretary Alan Milburn warned that the number of young people not in education, employment or training risked creating a ‘lost generation’:

The BCC has also trimmed its forecast for UK growth this year to 0.9%, down from 1.0% previously forecast.

It warned:

The Middle East conflict is a major economic drag, with business investment now expected to fall by 2.2% this year, before moving back to –0.1% in 2027.

Third economic pole needed to protect from ‘Trump shock’

Lisa O’Carroll

A new economic alliance between the EU and like-minded Asian allies should be set up to save the world’s economies from “Trump shock”, a new report by Chatham House, the foreign affairs think tank, says.

It was authored by Creon Butler, former director for international economic affairs in the National Security Secretariat in the UK cabinet office, and a “sous sherpa” at the G7 and G20 summits,

He calls for a “third economic pole” initially be made up of EU countries and members of the Comprehensive and Progressive Trans-Pacific Partnership who are committed to following rules-based trade.

The alliance should exclude the US and China as the former has made a dramatic break from rules while the latter has never fully committed to WTO rules, it argues.

The report says:

“China is far from the only country to behave this way but as the second largest national economy after the US, it has become a highly disruptive influence.”

Establishing a “third pole” would allow like minded countries to preserve and improve core rules in the largest economic space available with the EU and CPTPP countries between them accounting for 32% of global GDP. Others including the South Korea, Brazil, Turkey and South Africa.

The report adds:

“It is likely only a matter of time before the full suite of Trump policies substantially reduces trend growth and economic stability in the US, and possibly the wider world.”

The UK would be well position to take the group further. It is also the country likely to be “most damaged” if the current trade disorder prevails, it says, adding the “third pole” is “necessary” regardless of who is in the White House.

Troy Hooper, co-head of equity capital markets for the Americas at the financial intelligence provider Mergermarket, said Alphabet’s funding plans underscored the intensity of the race to lead the AI buildout.

Hooper told Al Jazeera:

“For hyperscalers, compute capacity is a direct driver of future revenue.

“By leaning into equity, Alphabet is bringing in permanent capital rather than burdening a balance sheet already absorbing record capex [capital expenditure].”

Tech giants are no longer ‘capital-light free cash flow machines’

Here’s the details of Alphabet’s $80bn equity raise:

Proposed Offerings

Concurrent underwritten offerings: $30 billion underwritten public offerings, consisting of: $15 billion in depositary shares representing mandatory convertible preferred stock; and $15 billion in Class A Common Stock and Class C Capital Stock; and
At-the-market offering: $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.

Private Placement:

In addition, Alphabet has reached an agreement to sell $10 billion of stock to Berkshire Hathaway Inc. in a private placement, comprised of $5 billion in Class A Common Stock at a price of $351.81 per share and $5 billion in Class C Capital Stock at a price of $348.20 per share.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, says this marks a shift in the financies of major tech firms:

“Alphabet’s $80 billion equity raise is a clear sign that the AI arms race is moving into a more capital-hungry phase, but the structure matters. It’s certainly a huge chunk of money to be raising, but the devil’s in the details on this.

The full $80 billion is less than 2% of Alphabet’s mammoth $4.6 trillion market cap, and around half of the total is an initial raise, with a $30 billion offering alongside the $10 billion from Berkshire Hathaway.

The other $40 billion is a flexible drip-feed mechanism that can be used gradually over time, not earmarked for AI investment. But, however it’s structured, one thing is abundantly clear. Long gone are the days when the tech giants were capital-light free cash flow machines.

Alphabet’s massive share sale, and Anthropic’s IPO, are also reminders that an AI crash would have serious consequences for investors, both large and small.

Ipek Ozkardeskaya, senior analyst at Swissquote, explains:

The AI race is no longer being funded solely by venture capitalists willing to lose money for a decade in exchange for a shot at changing the world. The financing is becoming increasingly institutionalized. Just yesterday, Alphabet announced plans to raise $80 billion to fund its AI ambitions – one of the biggest stock deals in history – including a $10 billion investment from Berkshire Hathaway.

This means that AI is increasingly becoming a financing story as well. And the deeper traditional finance gets involved, the more the AI story shifts from a technology narrative toward a financing and credit narrative.

What’s the risk? A failure of OpenAI or Anthropic – God forbid – would not likely trigger a systemic financial event. But the growing web of equity investments, debt financing, private credit facilities, infrastructure spending and long-term purchase commitments means that AI-related losses are increasingly finding their way into pension funds, insurers, asset managers, corporate balance sheets and the broader economy. We’re all in the same boat.