About this episode
This episode discusses the recent trend of major companies raising equity to fund their capital expenditures, particularly in the context of AI and data centers.
▶ Explore this week’s Tape — live, sortable, drill-down → Even the Cash Machines Are Borrowing Now The story this week was not that the AI build is expensive. Everyone knew that. The story was that the companies best equipped to pay for it out of their own pockets stopped doing so — three of them, in the same five trading days. Alphabet, which had not sold a share of stock since its IPO, raised about eighty-five billion dollars in equity to fund its data-center build, with Berkshire Hathaway taking ten billion of it directly (per CNBC). ¹ Meta, which did not need a dime, was reported to be lining up a raise of its own — and shed almost seven percent on Friday on the rumor alone (per Bloomberg). ² Apple, on page one of the same Cash Flow Memo, did the one thing nobody else in the arms race is doing: it rented. Take the first one, because it is the one with thirty years of history behind it. A company funds its capital spending out of its own cash flow right up until the build outgrows the cash flow. The day it reaches for outside money is the day the build stopped paying for itself. Alphabet’s trailing free cash flow fell about forty-four percent year over year — the capex ate it…
Topics covered
- AI funding
- capital spending
- equity raising
- cash flow
- data centers
Keywords
- equity
- cash flow
- data centers
- AI
- capital spending
Mentioned in this episode
Organizations: Alphabet, Berkshire Hathaway, Meta, Apple, CNBC, Bloomberg
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