Alphabet Inc. Class C (GOOGL.US) issued 80 billion to invest in AI, which companies will benefit?

On June 1, Alphabet (GOOGL.US) dropped a bombshell: plans to raise $80 billion through equity financing - one of the largest equity financing cases in Silicon Valley history - to supplement ammunition for expanding AI infrastructure. The next day, the "green light" from Omaha lit up simultaneously: Berkshire Hathaway, owned by Buffett, announced an anchor investment of $10 billion, which will be issued at a discounted price of approximately 6% per share of Class A shares. This move undoubtedly increased the heat of AI investment, and analysts also interpreted this move. The true background of the $80 billion equity financing is the super capital expenditure trajectory Alphabet has already formulated. For the 2026 fiscal year, Alphabet expects the full-year capital expenditure to be in the range of $180 billion to $190 billion, nearly doubling the actual expenditure of $91.4 billion in 2025. What is even more astounding is, according to information previewed by Alphabet CFO Anat Ashkenazi in the April earnings call, capital expenditures for 2027 will be "significantly higher" than the upper limit of $190 billion for 2026. Bloomberg Intelligence analyst Mandeep Singh estimates that Alphabet's capital expenditure in 2027 may exceed the $300 billion threshold, possibly surpassing Alphabet's own operating cash flow scale - supporting the AI landscape with an annual $300 billion injection of physical capital, an unprecedented move in the history of technology business. Alphabet is not alone. According to industry data from several institutions, the total AI-related capital expenditures of the four super-large scale cloud service providers - Amazon.com, Inc., Alphabet, Microsoft Corporation, and Meta - are expected to exceed $700 billion in 2026. Among them, Amazon.com, Inc. is the leader, with expected capital expenditures of $200 billion in 2026; Microsoft Corporation is currently running at around $150 billion; Meta is following closely behind, with expenditures expected to increase by 73% to between $115 billion and $135 billion. The influx of these huge amounts of capital is leading to a concentration of resources including "computing power, electricity, and network resources" by the giants, and its impact will span the entire 2030s. The Supply Chain extravaganza: from TSMC to optical interconnect "money flow" logic The market trends on June 2 confirmed the release effect of Alphabet's $80 billion capital "valve." Broadcom Inc., the main supplier of TPU, rose 4.7%. The two have been deeply integrated since the 2010s: Broadcom Inc. customizes AI ASICs for Alphabet Inc. Class C and supplies them with high-throughput Ethernet switch chips deployed in clusters. Behind Marvell Technology's 32% surge on the same day, there is a more crucial long-term logic - according to several foreign media reports in April, Alphabet Inc. Class C has entered into in-depth negotiations with Marvell Technology to jointly develop new AI memory processing units and partial computing modules for the next generation TPU. If the final agreement is reached, Alphabet Inc. Class C will seek a "second blood supply point" outside of Broadcom Inc. for the first time in the core architecture of TPU, which is a significant incremental boost for Marvell Technology's new chip business. NVIDIA Corporation CEO Jensen Huang recently predicted that Marvell Technology could become the "next trillion-dollar company" because the demand for optical interconnects and high-speed networks in AI data centers will far exceed the market's expectations, and the suppliers in this infrastructure layer - including Marvell Technology, Coherent, Lumentum, Arista Networks, etc. - will be the biggest beneficiaries in the global computing expansion cycle as leveraged effects. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) is also benefiting. As the only global supplier capable of stable mass production of advanced process AI chips (from 3nm to future 2nm and even A16 nanometer nodes), Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's revenue in the first quarter of 2026 reached a record $35.6 billion, a 35% year-on-year increase, and the composite annual growth rate of AI chip revenue is expected to exceed 60% by 2029. With Alphabet Inc. Class C continuously investing in capital expenditure growth, it may be the only company that maintains a neutral attitude towards which model provider or chip manufacturer will win, YR Research, an analyst at Seeking Alpha, said. For shareholders, an $80 billion equity financing is an event that is hard to ignore, and Alphabet's stock price performance after the announcement of the news, which dropped significantly, reflects investors' instinctive rejection of diluted earnings per share. However, more long-term perspectives are trying to reconcile this conflict. In a report released on Tuesday, HSBC analyst Paul Rossingto maintained a "buy" rating on Alphabet, only slightly lowering the target price to $420. He pointed out that Alphabet is in a "unique position of benefiting from AI" - no other company can simultaneously have such a comprehensive advantage in a base of value worth billions of dollars in advertising cloud, a TPU architecture that has been accumulated over the past ten years, and a cloud order backlog of $46.2 billion. According to his estimate, by the end of the first quarter of 2026, Alphabet Inc. Class C's cloud order backlog (excluding TPU hardware sales) had reached approximately $366 billion, compared to $108 billion in the same period last year - a more than threefold increase proves that "demand exceeds supply" is not just rhetoric, but a reality. Wells Fargo & Company analyst Ken Gawrelski detailed the cost expenditure flow. According to his estimates, to meet the increasing demand from cloud customers, Alphabet Inc. Class C needs to migrate nearly 60% of the computing capacity from its existing cluster for internal use to external customer use. He also predicted that the 9.3 gigawatts of new computing capacity for Alphabet Inc. Class C in 2027 may still be "conservative" and may need to further increase installation speed. The struggle between longs and shorts precisely means that $80 billion is not an overdraft of confidence, but a massive call for computing power. Furthermore, there is a shadow line quietly changing the entire capital market's expectations for new stock issuances. Alphabet's financing this time is highly likely to trigger a "siphon effect," diverting funds that were originally flowing toward large AI model companies like OpenAI, Anthropic, and others in massive IPO rounds. In institutional investment portfolios, the space for configuring an "AI theme position" is limited. When Alphabet Inc. Class C promises to invest $80 billion in new equity on its self-built computing infrastructure, some fund managers may marginally reduce their exposure to other model companies that have not yet gone public or have high valuations - this may become an important potential variable in the fluctuation of the IPO market in the coming months. Wall Street's another reaction to Alphabet's financing this time is to "recalculate the account book of AI economics." Seeking Alpha analyst Julia Ostian pointed out that "even in the case of the AI frenzy receding and companies reducing their token consumption, cloud service providers can still use this computing power capacity to serve other customer needs, or alleviate their own redundant costs in a rental model" - meaning that Alphabet's massive investment in computing power is not a win-or-lose gamble but a front-loaded investment with an asymmetric risk-reward ratio. Ostian added, "Regardng the beneficiaries of this huge capital expenditure, Broadcom Inc. and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR are undoubtedly the most obvious, with NVIDIA Corporation also ranking among them, as it still accounts for most of the total capital expenditures. Celestica is another critical manufacturer of data center hardware for Alphabet. As GPUs and TPUs cannot operate independently, CPUs are beginning to be valued - AMD and Intel Corporation will benefit from this." But for shareholders, this highly concentrated upfront cost burden is causing a profound logic change in the tech industry. The dominance battle from "technological advantage" to "capital advantage" is accelerating worldwide. In this war, cash reserves, financing capabilities, and debt capacity may be more important than the specifications of the chips themselves. A cluster built with large expenditures can still be leased by other manufacturers; conversely, if massive funds are not invested today, there is a high probability of facing a shortage of computing power and competition displacement with high model delays within three years. In the critical stage of AI transitioning from "who has the largest model parameters" to "who can serve the most users on the largest scale," having a leading position in technology may ultimately be overwhelmed by the advantages of early deployment and scale in infrastructure. An $80 billion equity financing will not be unique in Silicon Valley. Predictions show that by 2027, just the four tech giants's cumulative capital expenditures on AI infrastructure are expected to exceed $1 trillion, possibly doubling by the end of the 2020s. For Alphabet, partnering with Berkshire Hathaway to complete the most radical computing power bet in human commercial history may be a groundbreaking gamble. However, for the suppliers that hold a strategic position in the AI computing power chain, the capital story of AI is just beginning its prologue.