From 5m ago 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 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: double quotation mark 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: double quotation mark “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 . 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 5m ago Introduction: Alphabet to raise $80bn for AI spending 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: double quotation mark 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. 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 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: double quotation mark 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: double quotation mark “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 . 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

Source: The Guardian

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