Alphabet, the parent company of Google, recently announced plans to raise $80 billion worth of shares, which is the highest amount they have ever raised over the last two decades. And surprisingly, Berkshire Hathaway, founded by our legendary super-galactic bing-bong investor Warren Buffett, is investing a massive stake of $10 billion, adding to its existing $16.6 billion position.
So, does this mean Google is going to beat the shit out of other AI companies? Let’s see.
At first, it seems weird. I mean, why does a big guy like Google, with massive cash reserves, need to raise such a big bag? After all, they are one of the most profitable companies in the world. But according to them, the logic is simple: corporates and dudes across the world are demanding it. In fact, demand has reportedly grown so fast that it is starting to exceed the company’s available supply. It seems that while some AI dudes are dying of thirst, Google is drowning in demand. Well, good for them.
Anyway, to keep up with the demand, the company plans to invest heavily in the infrastructure that powers its AI ecosystem. That means building more big-boom computing capacity, expanding data centers, developing custom AI chips, and improving the tools it offers to businesses.
Alphabet has already increased its annual capital spending forecast by another $5 billion, bringing expected spending to between $180 billion and $190 billion. In short, Google is spending aggressively today because it believes AI demand will be even bigger tomorrow.
Well, this is nothing new. I mean, all AI companies are currently following the “Go big or go home” strategy. So, what makes Alphabet special? What is special is not that they are raising cash, but that they are raising it from Berkshire Hathaway.
Unlike other traditional degenerate Wall Street firms, Berkshire Hathaway has built its reputation over decades by investing in businesses with strong fundamentals and long-term potential. They are not your typical highly leveraged degenerative gamblers. They invest in value, and they are pretty damn good at it. That’s why investors pay close attention whenever Berkshire takes a position in a company.
According to analysts, Berkshire CEO Greg Abel appears to believe that Alphabet’s massive AI spending will generate reasonable returns over time, even as the company raises additional capital. That is something important to note.
Also, Google is not the only company spending heavily to compete in the AI race. In fact, almost every major AI company is searching for more capital. Anthropic recently reached a valuation of $965 billion after raising $65 billion in funding, reportedly making it the world’s most valuable startup and even surpassing OpenAI in valuation. Meanwhile, OpenAI is reportedly preparing for a potential IPO that could give it access to even more funding.
One thing many of these AI companies have in common is that they are burning cash like anything. It might even become the next dot-com bubble. This looks more like UNO, where people are repeatedly spamming power cards so that, at the end, one idiot will collapse. Companies are betting more and more just to stay competitive.
Unlike companies like OpenAI and Anthropic, Google seems to have some major power cards. Its business model is not entirely dependent on AI. It already owns several mature and highly profitable businesses. Search, YouTube, Cloud, Android, and digital advertising continue to generate billions of dollars in revenue every year.
Maybe this is the reason Berkshire is betting on Alphabet. Even if this AI bubble pops, Google has a very solid defense, unlike others whose entire business models seem like a gamble. Berkshire Hathaway tends to be a risk-aware company that has long followed the principle of a margin of safety. Considering all of this, Google might be one of the better-positioned investments in the AI sector.
What do you think? Will Google win the AI race? Let me know in the comments.
