Google is raising $80 billion, and you're bearish?

Every forecast I've ever built started the same way: exporting a CSV from NetSuite and praying nothing changed since this morning. The joys of static data.

I'm sure you know the pain - ERP actuals over here, CRM pipeline over there, and a hiring plan in a Google Sheet someone on the People team owns.

By the time you've stitched it all together, the numbers are stale and you've spent your week as a data plumber instead of a finance leader.

Cool, cool, cool.

This is why I think it's worth knowing that Abacum just became a Built for NetSuite SuiteApp. This is a pretty big deal as it is the first FP&A platform live in the NetSuite App right now.

Abacum sits on top of NetSuite and gives you connected planning, forecasting, reporting, and scenario modeling against live data. Strava, PostHog, and JG Wentworth already run their planning on it.

If you recognize yourself in the first sentence of this email, it's probably worth a look.

Wazzzzuppppp

I know I said I’d do a second post on the state of net dollar retention rates following last week’s post on disclosures not being disclosed so much. But then Google announced it was raising $80 billy in equity financing to keep building data centers and stuff.

So NDR part deuce will have to wait one more week.

To take a step back, when you need money to buy something in excess of what you’ve saved, you have three options (outside of calling your parents).

You can use the cash you generate from your business - Google has quite literally the best cash machine in the world - ads. It’s like oil, but in digital form, and with little to no marginal cost to produce more units. Plus, in what crazy scenario do your customers bid up the price of your highly accretive products for you?

Over the trailing twelve months the company generated $174 billion of operating cash flow. To zoom in on last quarter, they pumped out $45.8B. But $35.7B of that went to fund Capex. That leaves just over $10B to put back on the balance sheet or return to shareholders.

The next option is debt. You can only take on so much. Over the past year the company raised more than $85 billion of debt across six currencies, pushing total debt past $100 billion from $25 billion a year ago. One of those issues was a 100 year bond, notes that come due in 2126 at 6.125%, which means Google borrowed money that gets paid back by people who have not been born yet (also, I feel old reading that, kinda like when you see an NBA player born in 2003).

Which brings us to the third drawer, equity, or selling a portion of yourself.

Management recognized that loading even more debt onto the balance sheet would risk choking their pristine AAA/AA+ credit ratings. So they made the rare choice to pivot to the $80 billion equity raise to cover the remainder of the 2026 data center expansion.

This move dilutes current shareholders, who now own a smaller chunk of the company. But you’re doing it to make the entire pie worth more by way of whatever you’re funding (in this case compute capacity (and employee tax liabilities)).

What we’re seeing is a capital markets balancing act of massive proportions, as the company tries to optimize the mix between these three levers. Every finance team plays this game, but we’ve never seen it done at this magnitude. Just like your company, Google doesn’t want to overweight debt. And they also don’t want to run out of cash. But they also don’t want to dilute their shareholders and tank the stock price.

On the Q1 call, management guided 2026 capital spending to somewhere between $180 and $190 billion, and said 2027 would only climb from there. Some quick addition and subtraction and you can see they’re about to spend more building AI infrastructure this year than the best business model in the world can generate in cash.

Like I mentioned, it’s unusual to raise follow on equity as a public company, especially when you’re doing well (stock is near an all time high).

To be more specific, Google’s equity offering is 3x larger than anything we’ve seen before. And the majority of other offerings were companies that were in deep shit: either surviving a manufacturing and safety crisis (Boeing) or recapitalizing financial institutions to avoid insolvency during the 2008 meltdown (BofA, AIG, Citi). Alphabet is the first company to ever raise capital on this scale from a position of financial strength.

In essence, we’re witnessing a company weaponize its $4 trillion market cap. At that valuation, their cost of equity is remarkably cheap. Conversely, after printing over $75B in bonds in under a year, their incremental cost of debt is rising.

It’s a great lesson for private companies - when your equity is valued at an all time high, your stock is the cheapest currency on the balance sheet. Alphabet's finance team realized that continuing to fund 100% of physical infrastructure with debt would drive up their marginal cost of capital. So they chose to issue equity to re-balance their WACC (weighted average cost of capital).

What they’re also doing by linking the data center expansion to equity is better matching the time horizon of assets to liabilities. You do not fund a permanent, generation-defining industrial infrastructure shift purely out of rolling quarterly working capital or short-term bank debt. Yes, chips don’t have a useful life of forever, but they’re building massive data centers in which they can continue to refresh those chips. They’re treating AI infrastructure like a massive utility expansion with a long term horizon. And by pulling $80 billion out of the equity markets, they’re creating a permanent capital base that mirrors the multi-decade lifecycle of the physical grids they’re constructing. Plus, they’re forcing shareholders who buy in to come along for the multi decade journey with them.

So it begs the question - if you choose to walk this path, how do you do so without rocking the boat?

It would be a crazy strategy to just dump $80 billion on retail investors and let the chips (share price) fall where they may. They anchored $10 billion of it with Berkshire Hathaway, a steady, long term investor. And for a good chunk of the rest they are using mandatory convertibles so they have a fixed and known dilution schedule. This keeps public float more predicable.

While you are not Alphabet (unless Alphabet’s CFO Anat Ashkenazi is reading this - if so, what up Big Dog!), and you do not have a four trillion dollar currency or a hundred billion in borrowing capacity, the principles still hold.

When your valuation is rich, your equity is cheap, and yet that is exactly the moment most CFOs and founders clutch their shares like the last chopper out of Saigon. I’ve been here before, and parting with stock at a high price feels like getting robbed... Even though it’s actually getting cheap dollars in the door.

The second lesson is that scared money don’t make money. If you’re in for a penny you’re in for a pound. The worst choice you can make is taking one approach with your product roadmap and another with your capital strategy. The market does not reward halfway measures. And winning second place generally sucks.

So open the expensive drawer while it’s full. Because it has a way of closing without much warning.

Wishing you trade at a high revenue and EBITDA multiple,

CJ