The Exchange 6/2/26

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**Kelly Evans** (0:48)
Thank you very much, Frank. AI headlines are very much dominating the markets again today with a surprise capital raise, the next trillion dollar contender and Bitcoin has very much moved to the back burner. Welcome to The Exchange. I'm Kelly Evans. New highs, as you can see there, for the Dow and the S&P today, everything is positive. The S&P is on track for its ninth straight positive session, in fact. The semi stocks continue to outperform, with Marvell, the notable standout of 30 percent today. We'll have more on why ahead. Similar story for the hardware space, HPE soaring 16 percent after its earnings last night, and new all-time highs for the memory names once again, including the likes of Micron, Seagate, and Western Digital. All of this comes after huge news from Alphabet, Google's parent company announcing an $80 billion capital raise, one of the largest equity deals of all time, in part to fund its AI build-out. The stock is only down two and a quarter percent right now. So that's where we begin. Joining us in today's opening exchange, Rohit Kulkarni is Roth Senior Research Analyst, and Laura Martin who's a Senior Analyst over at Needham. It's great to have you both here just to hear multiple perspectives, Rohit, on the size and scale of this, and why do you think they did equity, Rohit, instead of debt?

**Rohit Kulkarni** (2:03)
Hey, thanks for having me. I think back in February, they did a 100-year bond.
They probably wanted to feel like, be a little bit conservative here and not affect any further credit rating risk. So go for an equity raise, which was quite remarkable. I think the clear message from them is AI compute demand is not linear, it's going parabolic. And more importantly, I think from their standpoint, the internal hurdle rate of return that they're seeing is very attractive and getting even more attractive. Although investors would continue to debate whether AI ROI is as attractive as they thought it could be.

**Kelly Evans** (2:46)
Right. To have 10 billion of that coming from Berkshire is, I think to many, a gold seal of approval. I would suggest that they believe that the internal rate of return you're talking about is going to be incredible and that it's worth that extra. And as I understand it, part of this is going to cover the tax bill for stock options and that sort of thing. Is that right?

**Rohit Kulkarni** (3:07)
That's what they seem to have indicated. But again, I feel that there's a bigger picture here. I think tax bill and tax options is just a small part of the equation. I think the bigger thing is that for the first time since IPO, probably the second time this company has raised equity, I think there's an opportunity cost of capital that's extremely high in my opinion, and that's why they went to equity as well.

**Kelly Evans** (3:33)
Yeah, only the second time they've ever raised equity. I mean, it's incredible to think about the first time being the IPO like you said. Laura, what does it tell you?

**Laura Martin** (3:42)
So three key takeaways. First, the access to capital is becoming a competitive advantage for these hyperscalers, and it makes it really hard for people like OpenAI to compete when basically Anthropic and Google will pay any price for energy, for compute, for back office, and they have the capacity to raise the money. So that's the first thing. Second thing is all of our estimates are too low for CapEx. What this tells us, since they did equity first, is they're going to do debt on top of this and they're going to raise their $185 billion CapEx, not only this year, but I think it's going to be higher next year when many of us had CapEx spending going down next year, that's going to end up being wrong. And the third thing is the government. Like we have the FCC focusing on taking ABC's broadcaster away. Meanwhile, Google is hitting $5 trillion and it's about to double if these bets on GENAI are correct and the government has no regulatory authority over these giants that are about to take over the world and retool the global economy. So the government's totally focused on the broadcasters, which are 50 years old and they're not focused on these things that really are about to dominate commerce.