The $80 Billion Question for Alphabet's AI

**SPEAKER_1** (0:00)
Alphabet, the owner of Google, is trying to raise $80 billion in a stock sale. 10 billion of that is gonna come from Berkshire, which is pretty crazy. And all of this is to fund their AI build out. At the same time, Trump is signing a narrower AI executive order. He got a lot of pushback from the AI industry and has adjusted. I'll talk about the pros and cons of that. GitHub's co-pilot's new usage-based pricing is burning through people's entire monthly budgets in a single day. Opal is pivoting to AI hardware. They received $40 million from OpenAI. They're now valued at $275 million. And Uber is capping their employees' AI spending at $1,500 per tool after they burnt through the entire annual budget in under four months. If you want to get all of these news stories straight into your email inbox every day, I have a newsletter you can subscribe to on the subscribe tab of aichatdaily.com. I was just looking at it, guys. I have a 40% open rate on a daily AI newsletter. Meaning if I sent out 10 emails, 40% of people are going to open every single one for something with thousands of subscribers. I'm super impressed. It is built for people that are actually shipping stuff. I can see the emails of the people that subscribe to it. So I have people from Google, OpenAI, Meta, Databricks, Microsoft, Amazon, Techstars, CopyAI, 11 Labs, TikTok, Cisco, Google DeepMind and tons of other incredible places that all read this newsletter. So if you want to get everything that's happening with AI, go check out aichatdaily.com/newsletter.
There's a link in the description or it's the big subscribe button on the top right hand corner of aichatdaily.com. The first story is that Alphabet is raising $80 billion through stock sales. The big anchor on this wholesale is that they're getting $10 billion from Berkshire Hathaway. More on that in a second. What's going on right now is that the AI infrastructure spending of Google and Alphabet, the owner of Google, has absolutely exploded to $80 to $190 billion this year. And the problem is that that's actually outpacing their operating cash flow. So it's basically forcing them to tap into equity and debt markets as the entire hyperscaler cohort, all of the other competitors like Amazon and Microsoft and everyone else, are all collectively moving towards $1 trillion in AI spending by 2027, which is wild. This raise in particular includes about $30 billion in underwritten offerings, $15 billion in mandatory convertible preferred stock, and a $40 billion at the market program launching in Q3. So Berkshire Hathaway's position has, you know, they're putting in $10 billion now, but their position has been growing. This isn't like a new thing for them. They only had about $4.3 billion in November, and they're up to almost $20 billion now. This is one of Berkshire's largest tech holdings after Apple, Alphabet, Microsoft, Meta, Amazon combined. They're all tracking towards the $700 billion in CapEx this year. And I think Wall Street is saying that there's going to be about a trillion dollars, like I mentioned, by 2027 Alphabet just admitted basically that Wall Street already knows something. The hyperscalers can't self-fund all of these AI build-outs that they're trying to do. So Berkshire's $10 billion vote of confidence, I think, is a pretty important thing if it's just nothing other than a signal that they're like, look, they make smart investments, they believe Google is going to be able to pay it back. I think you can expect Microsoft, Meta, and Amazon to follow in their own mega raises. It's interesting, we're all used to seeing Anthropic and OpenAI do these huge raises, but it's like Google's having to go out and get more money too, because it's just so expensive, but it's incredibly valuable to build these out, right? We see even XAI and SpaceX, right, with their massive data center build out that they used for training Grok, they could go and turn around, even if the Grok usage wasn't insane, they turn around and they can sell that back to Anthropic for $1.5 billion a month. So there's a lot of money to be made in these data centers and in buying all of these chips. Okay, Trump is signing an executive order today where he's asking AI companies to voluntarily submit their frontier models 30 days before they release them. Originally, it was 90 days, which I'm going to be honest, three months ahead of time, I think is too much if you're trying to be competitive. We're trying to be competitive with China and a lot of other countries. If all of our models were going to get held back, 90 days for the government, which I don't even think is that great at monitoring everything, but I guess you have to have some sort of regulatory body, perhaps, like the Federal Aviation Administration for airplanes. Maybe we need that for AI. I don't really like regulation, but perhaps it's needed. Anyways, I'm happy to move it down from 90 to 30 days, and it's also voluntary, right? So it's not like they're being forced. Now, the reason why they've made a bunch of these adjustments, Silicon Valley pushed back, which I think some people will say this is a pro, some people will say this is a con. They're like, oh, look, Silicon Valley is pushing around the government, telling them what to do. Or you could say maybe the government is listening to the people who have expertise in this area. There is two sides to the coin. I think right now this is showing that the federal oversight is basically voluntary. So there's no mandatory licensing regime, but we do have some sort of framework in place. And I think they're just right now trying to prioritize speed. They're doing some safety checks, but we're really trying to compete with China at this point. A couple other interesting things in this executive order, it explicitly forbids creating a mandatory federal licensing or pre-clearance for AI models. So it is locking in this kind of voluntary compliance only for now, which I think is great. Trump also delayed signing a much stricter version in May.