Alphabet, the parent company of Google, has announced plans to raise up to $80bn in equity to fund its vast AI infrastructure investments, one of the largest stock deals in history and a clear signal that the technology sector’s spending spree is entering a new, capital-intensive phase. The move includes a $30bn underwritten public offering, a $40bn “at-the-market” (ATM) offering programme expected to begin in the third quarter of 2026, and a notable $10bn private placement with Berkshire Hathaway.
The money will be used to expand what Alphabet calls its “world-class AI compute infrastructure to meet unprecedented customer demand”. In a filing, the company said half of the $80bn would be dedicated to scaling AI infrastructure and global compute, with the remaining $40bn set aside to cover an administrative change related to tax obligations associated with the vesting of employee equity awards. Alphabet’s chief financial officer, Anat Ashkenazi, has indicated that capital expenditure in 2027 is expected to be “significantly” higher than the up to $190bn budgeted for 2026, with some analysts suggesting spending could reach $300bn next year – potentially exceeding the company’s operating cash flow.
The sheer scale of the fundraising is a stark reminder to investors that, for all the billions already poured into artificial intelligence, meaningful returns remain uncertain. Jim Reid, market strategist at Deutsche Bank, described the move as highlighting the “unprecedented scale of the AI spending boom”, and added that “funding of the AI capex boom is becoming an increasingly key topic for markets”. Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted that the full $80bn represents less than 2% of Alphabet’s $4.6 trillion market capitalisation, but said the structure of the deal matters. “Long gone are the days when the tech giants were capital-light free cash flow machines,” he said.
The involvement of Berkshire Hathaway, which is buying $5bn of Class A shares at $351.81 and $5bn of Class C shares at $348.20, is particularly striking. Under the now-retired Warren Buffett, Berkshire famously stepped in to provide vital, and lucrative, funding during crises – such as the $5bn investment in Goldman Sachs at the height of the 2008 financial crisis. The decision to invest in Alphabet is widely seen as an endorsement of the company’s AI strategy and its potential for monetisation.
Alphabet is tapping investors before some of its biggest AI rivals attempt to join the stock market. Yesterday, Anthropic – maker of the Claude chatbot – confirmed 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, leapfrogging OpenAI, which was valued at $840bn after a $110bn funding round in February, to become the world’s most valuable startup. Anthropic has raised approximately $125bn from investors to date. SpaceX has also filed confidentially for an IPO and is reportedly seeking a valuation of $1.8tn or more.
Troy Hooper, co-head of equity capital markets for the Americas at Mergermarket, said Alphabet’s approach underscores the intensity of the race to lead the AI buildout. “For hyperscalers, compute capacity is a direct driver of future revenue,” he said. “By leaning into equity, Alphabet is bringing in permanent capital rather than burdening a balance sheet already absorbing record capex.”
Ipek Ozkardeskaya, senior analyst at Swissquote, warned that the institutionalisation of AI financing carries broader risks. “The deeper traditional finance gets involved, the more the AI story shifts from a technology narrative toward a financing and credit narrative,” she said. A failure of a major AI company would not necessarily trigger a systemic financial event, she added, but the growing web of equity investments, debt financing, private credit facilities, infrastructure spending and long-term purchase commitments means AI-related losses are increasingly finding their way into pension funds, insurers, asset managers and corporate balance sheets. “We’re all in the same boat,” she said.
Shares in Alphabet dipped 1.8% in pre-market trading to $369.63, a modest reaction analysts say reflects the fact that the stock sale will not hit the market all at once. The ATM offering will raise money gradually, the underwritten offerings will be held by investment banks, and Berkshire Hathaway is expected to hold its new stake. Alphabet’s shares have risen 126% over the past year.
Eurozone inflation pressures ECB
Inflation across the eurozone has climbed to its highest level since September 2023, according to a new estimate from statistics body Eurostat. Consumer price inflation reached 3.2% in May, up from 3% in April, driven primarily by energy prices, which rose 10.9% on an annual basis. Services inflation stood at 3.5%, while food, alcohol and tobacco inflation eased to 2.0% and industrial goods inflation ticked up slightly to 0.9%.
The uptick puts pressure on the European Central Bank to act. Joe Nellis, emeritus professor and economic adviser at accountancy and advisory firm MHA, said the ECB is increasingly likely to raise interest rates by 0.25 percentage points at its next meeting. “This marks a shift from earlier expectations that the ECB might ease policy later this year to reignite the sluggish eurozone economy,” he said. “Despite efforts to control it, underlying price pressures remain strong, with service inflation and wage growth persisting, businesses passing on costs, and global instability driving up energy and transport costs.”
UK housing market holds up
The Bank of England has reported that UK mortgage approvals for house purchases reached a 15-month high in April. On a seasonally adjusted basis, 65,900 mortgages were approved, up from almost 64,000 in March and the highest level since January 2025. The figure exceeded economists’ forecasts, suggesting the housing market is proving resilient despite the Middle East crisis pushing up interest rates.
However, net borrowing of mortgage debt by individuals fell to £4.4bn in April, down from £6.8bn in March. Martin Beck, chief economist at WPI Strategy, said the data suggests the economic fallout from the conflict has not hit household borrowing as hard as some feared. “The housing market is far from booming, but it is holding up better than the wider economic backdrop might suggest,” he said.
Separately, the Bank of England’s governor, Andrew Bailey, gave oral evidence to the Lords Economic Affairs Committee, where he discussed the UK’s economic outlook, interest rate policy, inflation control and the impact of geopolitical tensions.
AI and youth unemployment: a growing concern
The British Chambers of Commerce has forecast that the UK’s youth unemployment rate will rise to 16.9% this year and 17.8% in 2027, meaning almost one in five young people could be out of work by next year. The BCC blamed higher taxes, minimum wage rises and the impact of AI on entry-level jobs. “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,” the organisation said.
The warning echoes concerns raised last week by former health secretary Alan Milburn, who said the number of young people not in education, employment or training risked creating a “lost generation”. The BCC also trimmed its forecast for UK economic growth this year to 0.9%, down from 1.0%, and warned that the Middle East conflict is a major economic drag, with business investment expected to fall by 2.2% this year before moving to –0.1% in 2027.
Research from King’s College London adds weight to the AI-related fears. The study found that firms with workforces highly exposed to AI capabilities have reduced total employment by 4.5% on average, with the effect concentrated in junior positions, which saw a 5.8% decline. Highly exposed firms also became 16.3 percentage points less likely to post new job vacancies. A separate report by the Centre for British Progress found no evidence that AI has replaced jobs at scale in the UK thus far, but noted that wages in occupations with high AI exposure have grown more slowly since 2019, a trend that predates generative AI. Apprenticeships now account for 19% of AI-focused hires, offering an alternative pathway as traditional entry-level roles are automated.
A new report by Chatham House, the foreign affairs think tank, warns that the global economic system faces further disruption. Authored by Creon Butler, former director for international economic affairs in the UK cabinet office, the report calls for the creation of a “third economic pole” made up of EU countries and members of the Comprehensive and Progressive Trans-Pacific Partnership who are committed to rules-based trade, explicitly excluding the US and China. The UK, the report argues, is well positioned to lead such a group and would be the country “most damaged” if current trade disorder prevails. “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 report adds.
