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Welcome back to the rundown for another weekend deep dive. Today we are talking about Google and their record breaking $85 billion stock sale. This is the largest stock sale in history and it's coming from a company that's already sitting on $127 billion in cash. So why is one of the richest companies on the planet selling its own stock for the first time in 20 years? Well, in this episode we're going to break down what Google actually did, why other big tech companies might be line, and what this raise signals about the AI trade moving forward. We got a great one for you today. Let's dive in. On June 1, Google announced plans to raise $80 billion by selling their own stock and using that money to fund their AI infrastructure buildout. And when this news came out, it shocked a lot of people on Wall street and Silicon Valley. See, Google is one of the most profitable companies on the planet. Last year the company made 165 billion dol billion in operating cash flow and they already have about $127 billion in cash. So why is Google selling $80 billion worth of their stock and diluting existing shareholders? We'll get into the reasons a bit later. But first I want to do a Quick Finance 101 on how companies raise money. Because it's the key to understand this whole story. See, when a company needs money, there are three options that they have. The first option is just to use their own cash that they have sitting in the company's bank account. This one is pretty self explanatory option. Borrowing the money by issuing debt. In the corporate world this usually means selling bonds. Now a bond is basically an IOU bond. Investors hand the company cash today and the company pays the bondholders interest every year. And then at the end of the term, the company pays back the money in full. The majority of corporate bonds can range from one year all the way up to 30 years. And typically a company like Google with a pristine credit rating and a robust business usually borrows money because it's cheap for them. They can issue bonds at some of the lowest rates of any company on earth because bondholders know that they'll likely get their money back. But Google decided not to do that. They went with the third and usually last option a company does if they need money, they decided to issue more stock. See, most companies don't want to do this because it dilutes existing shareholders. With more shares being created, each existing share is worth a smaller piece of the company and shareholders don't like that. So that's why selling stock is usually the last resort when company needs money. Typically the companies that sell stock are like startups burning cash or struggling companies that can't borrow. Google is obviously neither, which is why this stock sale was so shocking from them. In fact, this is Google's first stock sale since 2006 when they raised the cute little $2.1 billion. But look, the market didn't seem to mind too much. In fact, the demand for Google stock sale was so hot that Google actually upsized the deal from 80 billion to to nearly $85 billion. This also makes Google the largest stock sale in history of capital markets. The old record was roughly a $70 billion stock sale by the Brazilian oil giant Petrobras back in 2010. Oh, by the way, one little detail here. Berkshire Hathaway is actually anchoring this deal with a $10 billion investment and for that they're getting a six and a half percent discount. This investment by Berkshire adds to the roughly $20 billion position that Berkshire already built up to since 2025. Now the wildest part to me in all of this is that back in 2024, Google actually spent $62 billion of their money buying back their own stock. And then in 2025 they spent another 45 billion buying back their stock. But then Starting in the first quarter of 2026, they quietly paused their stock buyback program and now they're doing a complete 180 by selling their own stock to raise money. And I think there are three main reasons why Google is doing the stock sale instead of just taking on more. One is that Google has already raised over $85 billion of debt in just the past year across six different currencies. Their total debt is now over $100 billion. Just for some context here, back in 2022, Google's debt was at just $11 billion. Now, a hundred billion dollar debt load for a company of Google's size isn't really concerning. The point here is that Google's already tapped the debt market multiple times over the last year and they didn't want to keep going back to that well and put their credit rating at risk. Now that brings me to the second reason for the stock sale is that Google stock has actually more than doubled in the past year and is trading near all time highs. Rule number one of selling anything is to sell it when it's expensive. And Google is selling their own shares near all time high levels. And finally, I think the third reason for this equity raised by Google is that the big IPOs are happening. SpaceX just had their $75 billion IPO, and then OpenAI and Anthropic have both confidentially filed to go public soon, so they're likely going to chase a similar number to Space X. So I think Google wanted to raise their money from the equity market before the giant IPOs hit. So, yeah, I think those are the three reasons why Google chose to sell their stock instead of taking on more debt. But now let's talk about why a $4 trillion company needs to raise all that money in the first place. And if this is a potential sign that the AI bubble is about to pop. Google is spending a lot of money on AI. According to their latest earnings, the company is projecting to spend 180 to 190 billion billion dollars on capital expenditure this year. They've already said that 2027 capex is going to be significantly higher than that. Now, keep in mind, Google generated about $174 billion in operating cash flow over the last 12 months. So that means that Google is going to spend more money than what they make from their current business, which is why they have to raise money. But here's the thing. Google isn't spending all this capex money because they think there's going to be all this AI demand. What they're saying is they already have the AI demand and they don't have enough supply to meet it. Just to give you some numbers here, Google cloud revenue grew 63% last quarter to a record $20 billion. And then on top of that, Google's cloud backlog nearly doubled in a single quarter to more than $460 billion. And Google expects to turn about half of that into revenue within two years. CEO Sundar Pichai said in the recent earnings call that his biggest concern is not having enough compute capacity. In fact, goog so compute constrained that they signed a deal to rent compute from SpaceX. Google will pay SpaceX $920 million a month, about $30 billion over three years, for access to compute capacity at one of SpaceX's data centers in Memphis, Tennessee. Google probably wouldn't have signed that deal with SpaceX if they had sufficient compute capacity today. So I guess it kind of makes sense on why Google is borrowing so much money and selling their stock to raise money, because they can't build out their AI data centers fast enough to meet the demand. And the bull case here is that the more money that Google spe building out their AI infrastructure today and increasing their compute capacity, the more money Google will make from their AI Businesses like Google, Cloud and Gemini. To be fair, there are some downsides from spending all this money. The first one is kind of a sneaky downside. It's depreciation. See, when you buy $180 billion worth of AI chips and server data and data center buildings, accounting rules don't let a company expense all that at once. You have to spread that expense across your income statement over several years. So even after Google's capex spending slows, the expenses will keep showing up quarter after quarter for years to come. Analysts are already flagging 2027 as a potential air pocket year for Google's earnings, where the depreciation bill from all that spending will hit the income statement before all the revenue arrives. So Google's earnings in 2027 could appear weak until the revenue catches up down the line. But look, that's more of an accounting thing and it's probably not keeping most investors up at night. The big concern that everybody has from all this spending is, is the risk of overbuilding. People are starting to make the reference of how the AI boom today is similar to the dot com boom of the late 90s. Back in the late 90s, telecom companies spent tens of billions of dollars laying fiber optic cable in preparation for the Internet boom. The problem is they ended up overbuilding and the demand didn't come on as fast as they expected. So many of these companies ended up going bankrupt as a result. But here's what makes the AI version of this even riskier. The fiber that was put in the ground stayed useful for decades to come. We ended up using it as the Internet demand picked up. But AI chips don't age like fiber optic cable. A cutting edge AI chip today is basically obsolete in five to six years. So if Google and other big tech companies overbuild, they don't end up with a warehouse of future capacity. They end up with a building full of outdated chips that need to be replaced. So that's the real tension here. The demand for AI is real, but will that demand continue to grow at the rate that justify all the borrowing and and the rush to build? Big tech companies clearly think the demand will be there. And within days of Google's stock raise, there were reports that other big tech companies were considering doing the same. So let's talk about it. Google spending all this money on capex is just one slice of the AI spending picture. The four biggest hyperscalers, Amazon, Microsoft, Meta and Google, are expected to spend more than $700 billion combined on CapEx this year. And every one of them is staring at the same math problem. The AI bill has outgrown their cash flows. So when Google announced that they were raising 80 plus billion dollars by selling their own stock and saw a ton of demand, I'm sure the rest of the hyperscalers took note of that. In fact, the Financial Times is now reporting that Meta is weighing doing its own stock offering and that the discussions intensify specifically because Google's offering went so well. And we know that CEO Mark Zuckerberg is the master at copying from other companies, so it's no surprise here that he might want to copy Google's deal structure here as well. Now, to be clear, nothing is official. In fact, a Meta spokesman called the whole report pure speculation. But I can see why Meta might need the money. Meta plans to spend $145 billion in CapEx, with even more coming in 2027. As for the company's business, they made about $115 billion in operating cash flow in 2025. So they're already projected to spend more money on CapEx and than they make from their current business. I think all the signs are there that Meta could do a stock offering soon because they've already borrowed $55 billion in just the last few months and they also halted their share buybacks in late 2025. And this likely doesn't stop with Meta. Analysts told the FT that Microsoft and Amazon are likely considering their own stock sale as their data center spending have surged. So we are now at the stage of the AI cycle where the most profitable companies in the history of capitalism are are now selling stock, stacking debt and pausing share buybacks to build AI data centers. So either this opportunity is so big that all this spending is justified, or this might be the moment that we look back on as the top of the AI bubble. So what's my take here? Well, this might be kind of a hot take, but I actually think that Google selling $85 billion of their own stock was a smart move. Clearly the demand for AI is there. Google has says they can't meet all the demand right now. In fact, they've had to rent compute capacity from SpaceX. So every dollar that Google puts into building out their AI infrastructure right now should lead to more revenues for Google down the line. Plus the fact that Google is selling their stock while their stock is trading near record highs and locking in the funding before SpaceX open anthropic soak up all the dry powder, I think is a savvy move. That being said, Google doing the stock offering is also a signal to the market that Google's management thinks that their stock is overvalued right now, at least in the short term. Remember, this is a company that has spent over hundred billion dollars in buybacks over the last two years and companies tend to buy back their stock when they think that it's cheap and they sell it when they think that it's expensive. So if the upper management at Google, the people literally inside the AI buildout are sending that signal, well, that makes me a bit nervous as an investor. Well, all right guys, that's it for today's weekend deep dive. Hope you guys enjoyed that one. Let me know in the comments of what you think. Was Google's 85 billion dollar stock sale a genius move or is it a top Signal for the AI trade? Drop your thoughts on Spotify and YouTube and while you're at it, consider giving us a 5 star rating as well. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike for all the work behind the scenes and we'll see you guys back here tomorrow.