Should you buy Alphabet shares following $80 billion capital raise?
The Google parent company’s stock fell following the raise, but experts think it’s necessary for Alphabet to capitalise on the AI opportunity.
Alphabet’s shares fell by 3.9% on 2 June following news that the company was raising $80 billion in fresh capital to fund increased spending on artificial intelligence (AI).
According to a 1 June statement from Alphabet (NASDAQ:GOOGL), a Magnificent 7 stalwart and parent company of Google, the new capital will be used to fund “general corporate purposes, including capital expenditures to scale AI infrastructure and global compute”.
The funds are being raised largely by issuing new shares. That means that each share now gives its holder a smaller portion of the overall ownership of Alphabet’s equity – this effect is known as ‘dilution’.
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“Alphabet is reversing its long-held capital allocation policy of buying back shares and issuing $80 billion in equity,” said Michael Field, chief equity analyst at investment research company Morningstar.
Despite this, $80 billion doesn’t represent a substantial dilution – it is less than 2% of Alphabet’s total market capitalisation (market cap) of $4.4 trillion.
The structure of the fundraise will also lessen the impact on Alphabet’s shareholders. Only $30 billion worth of new shares are being issued on public markets initially, with a further $10 billion being sold to Berkshire Hathaway (the conglomerate run by legendary investor Warren Buffett until last year) through a private placement.
The remaining $40 billion of shares will be drip-fed into the market through an ‘at-the-market’ (ATM) offering, beginning in Q3 2026.
Why is Alphabet raising more capital?
AI is pushing Alphabet as well as other big tech companies away from their capital-light roots, into a more intensively competitive spending environment.
Alphabet and its competitors “are now burning through cash to win the AI race”, said Morningstar’s Field. “Public equity is the cheapest source [of cash] available, particularly in a rising interest rate environment.”
Gaining leadership in this emerging field is a priority for Alphabet. Its statement in relation to the capital raise highlighted strong demand for its AI solutions and services, and referenced the $180-190 billion in expected capital expenditure for 2026 that it forecast in its Q1 earnings call.
There is an argument that Alphabet is one of the best-positioned companies to capitalise on AI.
“They benefit from owning the full technology stack – from the Tensor Processing Units (TPUs) that perform the AI calculations, through leading-edge AI software models including Gemini, as well as having strong consumer reach through Google search, Android devices, and Chrome,” James Ashworth, co-portfolio manager of Brunner Trust told MoneyWeek.
“Like many of the other hyperscalers, Alphabet is seeing unprecedented customer demand for AI compute,” Ashworth continued. “It is clear that Alphabet sees this as a time to increase its investments to support what it sees as a significant growth opportunity ahead.”
Alphabet stated that it will also use the proceeds to pay the costs of certain ‘capped call’ contracts it expects to enter into in order to reduce the potential dilution to its shares, while the ATM mechanism is expected to facilitate a change in how Alphabet meets its tax obligations associated with employee equity grants.
Should you invest in Alphabet shares?
Whether or not Alphabet shares make a good investment for you depends on your personal circumstances and investment goals.
As of 1 June, Alphabet’s Class A shares trade at a forward price/earnings (P/E) ratio of just under 27. That puts Alphabet right in the middle of the Mag 7 in terms of value.
Company | Forward P/E ratio (2 June 2026) |
|---|---|
Meta | 19.1 |
Microsoft | 23.7 |
Nvidia | 25.5 |
Alphabet | 26.7 |
Amazon | 31.2 |
Apple | 32.1 |
Tesla | 200.0 |
Source: Yahoo Finance
This suggests that Alphabet is reasonably priced in the context of the wider Mag 7 group. However, this group has a reputation for being highly valued, with those valuations based largely on optimism over future AI growth. Buying shares that are valued like this comes with risks, should (for example) AI adoption rates slow or macroeconomic factors hinder these companies’ growth.
Why do Alphabet shares have two symbols?
Alphabet is an unusual company in that its stock trades under two different symbols: GOOG and GOOGL.
These represent two different share classes. GOOG corresponds to Alphabet’s Class C shares; these don’t have voting rights. GOOGL corresponds to Alphabet’s Class A shares, also known as common stock, which confer one vote per share for holders.
The voting rights that GOOGL stock permits mean that these sometimes trade at a slight premium to GOOG shares, but their values are usually very close as both give shareholders equal access to Alphabet’s profits.
Alphabet has a third share class (Class B) which isn’t traded publicly. It is held by the company’s founders and insiders. These shareholders can exercise 10 votes for each share they hold.
How to invest in Alphabet shares
If you want to invest in Alphabet, the most direct way to do so is to buy its shares directly. Most investment platforms or brokers will enable you to buy its stock.
If you haven’t bought US-listed stocks through your broker or investment platform before, you may need to complete a W-8BEN form – a simple form that entitles you to a reduced tax rate in the US on your investments. Your broker will prompt you for this if and when it is needed.
You may prefer to invest in funds rather than individual stocks, and some investment platforms only support fund investments. In that case, if you want to buy Alphabet shares, you’ll want to look for funds that have a high weighting towards the company.
Any exchange-traded fund (ETF) that tracks the MSCI World Communication Services Index will have a very high weighting in Alphabet, since the index is strongly weighted towards Alphabet shares. As of 30 April, Alphabet’s two share classes made up the index’s top two constituents and accounted for approximately 52% of the index between them.
The iShares MSCI World Communication Services Sector Advanced UCITS ETF (LON:IUCM) tracks the S&P 500 Capped 35/20 Communication Services Index, which limits its weighting to 35% for the largest stock and 25% to the second-largest. It holds both Alphabet share classes, with their combined weighting accounting for just over 30% of the fund’s holdings as of 29 May.
Some investment trusts can also offer exposure to Alphabet’s shares. It is the largest holding in Allianz Technology Trust (LON:ATT) with 10.0% of assets as of 30 April, as well as the Brunner Trust (LON:BUT) where it makes up 5.5% of the portfolio as of the same date.
Alphabet shares account for a combined 8.5% of Polar Capital Technology’s (LON:PCT) portfolio as of 30 April, though that makes it the second-largest holding behind Nvidia, which makes up 8.9% of the portfolio.
