Alphabet's US$90 billion equity raise: the four pieces, and how a lender reads them

Money for a build-out is either equity or debt, and either kind can be raised by the company as a whole or inside one project. That gives four boxes:

The boxes are not exclusive: one build can use all four at once. The fourth is what is usually meant by project finance, and it is where a commercial lender's own reading of a single facility does the work. This raise sits entirely in the first.

New shares, US$20.7 billion. Alphabet has three classes of stock: Class A carries one vote a share, Class B ten, and Class C none, according to its annual report. It sold A and C in equal numbers, and no B. New shares dilute every existing holder's percentage; they also bring cash in, so the company is cut into more slices and is bigger by what the new owners paid.

Mandatory convertible preferred, US$19.3 billion. A share that pays a fixed 6.25% a year until about May 2029 and then must turn into ordinary shares — how many depends on the share price at the time, within a set range. Nothing is repaid in cash at the end. Investors who want an income get one; the company gets the money now and issues the shares later. Part of the proceeds bought capped calls, which the filings say are expected to reduce the dilution when the preferred converts, up to a cap.

Private placement, US$10 billion. Shares sold directly to one investor at a negotiated price under a signed purchase agreement — here an affiliate of Berkshire Hathaway, US$5 billion of each class — rather than to many investors through the underwriters. It is the opposite of a public offering.

At-the-market program, up to US$40 billion. Permission to sell new shares into the market at the going price, a little at a time, through three banks acting as agents. It is a capacity, not a sale: Alphabet said sales were not expected to start before the third quarter of 2026. Its stated main use is tax: when employees' share awards vest, the company pays their tax in cash and plans to issue stock for the same amount — about US$30 billion of it for 2026.

Alphabet's own explanation is in its launch release: the offering is part of its plan “to fund its investments in a balanced way while retaining a healthy balance sheet”, alongside operating cash flow and debt. The note leaves it there.

In general, equity is the layer a lender stands on. It is paid last and absorbs losses first, so every dollar of it sits between the lenders and a loss. When a borrower's planned spending runs ahead of the cash its business produces, and it has already been borrowing, new equity is what keeps its debt in proportion to its earnings — the measure the leverage page works through. Debt has to be repaid on a date; shares do not.

A mandatory convertible reads the same way from the lender's chair: it ranks behind every loan and every bond, it carries no repayment date, and it ends as ordinary shares. The dividend is the price of that. Small businesses meet the same logic at their own scale: a builder's bank wants the owner's money in before its own, which is what loan to cost measures.

Expect the question in some form: why would a company that produces this much cash raise equity instead of borrowing more? A good answer starts with the sums the company published — US$174 billion of operating cash flow in a year, US$180–190 billion of capital expenditure planned for 2026, over US$100 billion of debt — then weighs the two costs: dilution for the owners against more claims ahead of them. It does not claim to know the board's mind; it reads the numbers the company published.

Know which side of the bank a deal like this belongs to. Selling shares is equity capital markets, an investment-banking business; lending to the same company, or to the data centre it builds, is commercial and corporate banking. Commercial Banking vs Investment Banking sets out the difference.

When a build-out of this kind reaches a commercial lender directly, it is often as the fourth box: a construction or project loan to the company that owns one facility. Read it the way a development loan is read — how much equity is in and when, what the contracted income is and who pays it, and what stands behind the loan if the build runs over cost or late. Property Development Finance and Drawing a Development Loan are the same reading on a smaller site.

A bank lends against the equity already in, and asks for it before its own money goes out. Bring the number and the timing: how much the owners are putting in, in what form, and when. Money the owners lend to the business can count like equity if it ranks behind the bank, which is what a subordination agreement does.