Alphabet’s (GOOG, GOOGL) planned $80 billion stock sale puts a new price tag on the AI race: Even Google’s cash machine is tapping Wall Street to keep up.
Alphabet stock fell 3.9% Monday, its worst day in two months, as Wall Street digested what the deal says about the rising cost of AI. For years, Alphabet spent more buying back its own stock than it spent on capital expenditures — the buildings, data centers, servers, and equipment that keep Google running. Now AI has blown up that budget.
Alphabet expects capital expenditures to roughly double this year as it races to build more computing power for AI. That pushes spending on infrastructure far above the cash Alphabet has been sending back to stockholders through stock buybacks and dividends. Buybacks, or stock repurchases, are when a company buys its own stock, often reducing the number of shares outstanding.