Alphabet slides 4% on $80B AI raise as copper hits record

Alphabet's $80 billion equity raise sent its stock sliding and copper to a record, exposing the diverging fortunes of AI spenders and AI enablers.

The S&P 500 edged up 0.1% as Alphabet's 3.9% slide on an $80 billion raise was offset by copper's rally to a record $6.70.

"The fact that Alphabet chose equity versus credit suggests the market has become less favorable to AI data center financing," said Jason Helfstein, internet analyst at Oppenheimer.

Alphabet closed near $362, down 3.9%, after announcing plans to sell $80 billion in stock — including a $10 billion private placement to Berkshire Hathaway — to fund what it called "unprecedented customer demand" for AI. The broader tech selloff pulled Microsoft down 4.2% and Meta 0.5%. Copper futures surged almost 2% to a record $6.70 per pound on the prospect of sustained demand from data center construction.

The equity raise suggests that even the largest hyperscalers may need to tap public markets to fund AI infrastructure, potentially diluting existing shareholders but confirming the scale of the buildout. Alphabet expects to spend $187 billion on plants and equipment in 2026, up from $91 billion last year, with spending projected to top $240 billion in 2027.

Alphabet's capital plan marks a shift from debt to equity financing. The company raised more than $85 billion in debt across six currencies over the past year, bringing its total debt balance to more than $100 billion. The new equity package includes roughly $40 billion in stock to be dripped into the market starting in the third quarter and $30 billion in underwritten shares plus mandatory convertible preferred stock backed by Goldman Sachs, JPMorgan, and Morgan Stanley.

"We now do expect more hyperscalers to evaluate issuing equity to fund their growing capex needs," said Divyaunsh Divatia, technology research analyst at Janus Henderson.

Berkshire Hathaway's $10 billion investment adds to the position it has built since the third quarter of last year. The conglomerate more than tripled its stake in Alphabet last month to $16.6 billion, making it one of its largest common stock investments. Berkshire shares rose 0.3% on Tuesday.

"This additional purchase shows that Greg Abel believes that Alphabet will earn a reasonable return on its AI capex spending even with the firm issuing additional shares," said Bill Stone, chief investment officer at Glenview Trust Company.

The divergence between Alphabet's stock and copper prices highlights where investors see the AI opportunity. While shares of the hyperscalers — Meta, Microsoft, Amazon, and Alphabet — all dropped Tuesday, copper marched higher as traders priced in years of metal-intensive data center construction.

"Think about where the bottlenecks are in the infrastructure build," said Adrian Hellfert, chief investment officer at Westwood. "We have a lot of shortages — memory, CPUs, to a certain extent, servers, copper. Yeah, just about everything."

The spending estimates have been climbing rapidly. At the start of the year, Wall Street expected $115 billion in Alphabet spending in 2026 and $130 billion in 2027. Those figures now stand at $187 billion and $240 billion, respectively.

This article is for informational purposes only and does not constitute investment advice.