Alphabet Plans $85 Billion Equity Sale, Pauses Buybacks for AI Capex
Alphabet is halting share buybacks and preparing to issue around $85 billion of new equity—its first share offering in 20 years—to fund escalating AI data-center investments. The $85 billion raise comes as the four largest AI investors project up to $725 billion of capital spending this year, squeezing free cash flow and suppressing repurchases industry-wide.
1. Equity Sale to Fund AI Data-Center Expansion
Alphabet is preparing its first equity issuance in 20 years, targeting about $85 billion in new shares to finance construction and upgrade of AI-focused data centers. The move underscores the company’s shift toward capital-intensive infrastructure as computing demands grow for its Gemini and other AI services.
2. Share Buybacks Suspended Amid Capex Surge
The company has suspended all share repurchases this quarter, joining peers in redirecting cash from buybacks into capital expenditures. With only one of the four largest AI investors buying back stock in Q1—and that at a decade-low pace—the traditional mechanism for boosting earnings per share has been sidelined.
3. Industry-Wide Impact on Free Cash Flow
Big Tech’s combined AI capex is projected at as much as $725 billion this year, depleting free cash flow and prompting some firms to issue new equity. This trend marks a departure from capital-light business models toward heavy spending on computing infrastructure, raising pressure on companies to demonstrate returns on invested capital.
