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plmpsu 21 hours ago [-]
Quoting:
In addition, Alphabet has reached an agreement to sell $10 billion of stock to Berkshire Hathaway Inc. in a private placement, comprised of $5 billion in Class A Common Stock at a price of $351.81 per share and $5 billion in Class C Capital Stock at a price of $348.20 per share.
This investment by Berkshire Hathaway adds to the position it has built since Q3 2025.
bel8 21 hours ago [-]
They know Google has a ton of data to train LLMs on.
Recently I have been asking YouTube's new AI about some videos ("when is Steam metrics mentioned in the video?" for example), which means they also index videos. This is an unthinkable amount of data.
I'm actually impressed at how bad Alphabet is with LLMs since they invented the thing as we know AND have all the data to train on, yet OpenAI and Anthropic are eating their pie.
marcus_holmes 16 hours ago [-]
Kodak problem. Kodak invented the digital camera but their revenue came from making photographic film. They were unable to take advantage of their invention because it would cannibalise their revenue. That didn't stop other people and the revenue died anyway.
Google's main revenue is ads based on search. LLMs are a competitor to search. Creating better LLMs will cut into search volumes.
In any large organisation this is extraordinarily difficult to manage - they have to incentivise the new tech that is actively harming the current revenues, while maintaining as much of the old revenues as possible, without creating internal conflict between these two parts of the organisation that will kill it.
Though in fairness to Google they do seem to realise this and are trying to adapt - they're letting the LLM folks mess with search. It'll be interesting to see how this goes.
wrsh07 14 hours ago [-]
This is a sensible-seeming take at first blush, but it doesn't hold up to any scrutiny (or maybe my scrutiny is faulty - you tell me!)
Sundar and many of his executives have certainly read or heard of The Innovator's Dilemma, and I expect they're all moderately paranoid that it will be their downfall.
Also, that's not it. Google has a great ai app called Gemini where they have at various points hosted the top ai image generation model (certainly for speed, and for a while for accuracy) and have innovated with features like deep research
They are monetizing their ai conversations more effectively than OpenAI could dream of via ads and chat in Google search.
They are heavily investing in compute and talent.
When they've added llm results to Google search it has _increased_ engagement and re-engagement.
What part of the competition are they blissfully ignoring?
(I have counter arguments to some of these points, but I would rather hear other people's)
marcus_holmes 14 hours ago [-]
I heard Google search volumes by humans were declining, but I can't find the reference now so may be wrong. It's definitely changing the entire SEO industry.
Are they actually implementing ads in chat yet? I haven't seen an ad in Gemini yet.
Again, the results I've seen is that LLM results in search have resulted in more zero-click searches (as a proportion of all searches), which isn't increasing engagement? But again, I may be wrong, what are you basing your assertion on?
I didn't say they were blissfully ignoring anything. I gave them credit for knowing the situation they're in and doing something about it.
The problem that I was talking about (probably badly getting my point across) is that it's internal conflict and strife that causes the pain here. One part of the company is incentivised on increasing revenue on the existing business. The other part of the company is incentivised on increasing revenue for the new business. But the new business is at the expense of the old business, so it sets up internal conflict where each part of the business tries to protect its own incentives. And Google has always been afflicted with rife internal politics.
surajrmal 4 hours ago [-]
Google search related ad revenue is still going up. Volume isn't everything. Personally, as llms have gotten better I do more and more product research on Google.
thefounder 9 hours ago [-]
Even if they include ads in Gemini the issue is that Gemini is not the best AI app. It’s maybe the 3rd or 4th. So if Google becomes the 3rd best “search/AI engine” the future is not that bright.
wrsh07 4 hours ago [-]
Gemini is a brand new surface that Google has created to capture the current excitement around AI, but it's not the only surface into which they're shoving AI.^
ChatGPT's growth is incredible, but they essentially have to get all of their growth from inside codex or ChatGPT apps. Google can auto query Gemini with every search. There's an interesting piece of data which is that this tells them (on a conditioned basis^^) when is the chat result more effective than the search and vice versa?
Google can force growth of Gemini by leveraging their existing properties. This is a huge asset, and if you're wondering why Meta has artificially high usage of their LLMs it's because distribution is hard and Meta and Google have a lot of surface area to distribute on
^ no, I don't mean this as a compliment, although it does lend credence to the idea that Google is willing to update its current products with AI.
^^ ie conditional on the user's willingness to view the chat result
surajrmal 4 hours ago [-]
Search's AI mode is by far the most popular "AI app". Most of the time I don't end up using Gemini, it's because search's AI mode is good enough for my needs and I use it out of habit. I imagine a lot of other would-be Gemini users are in similar shoes.
CuriouslyC 4 hours ago [-]
Google doesn't seem to "get" agentic autonomy. Their models are trained to solve short problems really well, but they get confused over long time horizon tasks and kinda suck at tool calling to boot.
keeda 11 hours ago [-]
I agree that all of today's CEOs have learned from history and are paranoid about disruption, and I agree that Google is pivoting effectively and will even thrive in the AI era, given their technical and distribution advantages... but I think their revenues and profits and dominance will be much lower than what they are today: https://news.ycombinator.com/item?id=47957708
wrsh07 4 hours ago [-]
This take overlooks most of the work that Google has been doing in the past decade.
Have you seen their Cloud business?
Moreover, Google has continued to drive search growth since ChatGPT arrived and is executing competently. Their models are good (not great), but they have enough compute and one of the best ML-focused chips such that they aren't beholden to Nvidia (instead, they're beholden to fabs: tsmc - this is a much better dependency since Nvidia is hell bent on extracting as much value as they can from their position in the stack and it would be against the nature of tsmc to behave similarly)
Will Google's ad revenue decrease? Advertising is an incredible business because it is anti fragile.^ Even if search revenues decrease from their current highs (I would bet heavily against this), they still have YouTube with shorts and a robust display ads business that is going to improve if AI supercharges the economy (more companies - # startups founded in Jan 2026 is much higher than # founded the previous January, more products, advertising and distribution become the differentiators for these products)
If you're wondering how anthropic is going to continue to grow its base, the answer is advertising. In fact, Google is situated to fundamentally support everything that anthropic needs. Who cares if they make worse margins than anthropic? They'll benefit from the entire ride up, and they'll do the same for the next startup of that scale.
> What part of the competition are they blissfully ignoring?
coding models? their own devs use claude code.
4 hours ago [-]
Saline9515 9 hours ago [-]
LLMs still need a search API, and use it a lot.
Google is well positioned to earn from this service, especially if they can prove that their search service is superior to competitors. While they lose some of their moat, they are well positioned to dominate the market, just like they did in the consumer space.
gmerc 8 hours ago [-]
That’s not what claude code does… and that’s exactly the dilemma for Google.
Snafuh 7 hours ago [-]
Claude Code is not the majority of AI usage.
People asking any AI chat interface for ideas for their honeymoon will trigger some kind of search.
SEO is still relevant and Google might still be able to sell top spots in their search so LLMs will pick it up.
freedomben 6 hours ago [-]
exactly. Claude is in a niche. It's a high-value niche right now, but a niche nonetheless. Normies don't use claude much based on the numbers I saw. Search is still highly relevant and Google seems well positioned to capitalize on it.
dominotw 5 hours ago [-]
so the argument here is that its too niche for google to care ? i dont belive that they made explicit decision to make a lame version of claude code that their own devs dont use.
marysol5 9 hours ago [-]
Yeah but LLM's don't offer you an advert.
"You tried to find a recipe for cupcakes, well all I can offer you is an advert on kitchen appliances"
swores 7 hours ago [-]
> "LLM's don't offer you an advert."
Some already do, and some of the ones that don't will in the future.
Of course that's not to say that the advertising situation will be identical to that of pre-LLM search engines, and the differences may lead to radically different economic models and user experiences. But I was just correcting your statement.
smth-smth-ai 4 hours ago [-]
> Kodak invented the digital camera but their revenue came from making photographic film. They were unable to take advantage of their invention because it would cannibalise their revenue.
a bit more nuanced take on the failure would also account for executives backgrounds at the critical period:
- in 1981 Vince Barabba — Kodak's Head of Market Intelligence — conducted an extensive internal study that explicitly concluded digital photography could replace film and that Kodak had approximately 10 years to prepare for the transition.
- Kodak's leadership in 1980–1993 saw the company through the lens of its founding identity — silver-halide chemitry, precision coating and manufacturing, and the extraordinarily high margins of the film-plus-processing business. This identity-driven decade was spent on failed diversification and defending film instead of building an electronics cost structure and a defensible high-margin position. They steered capital and attention toward businesses that fit that self-image (specialty chemicals, pharmaceuticals, hybrid film products) rather than toward digital cameras, which meant fighting Sony and Canon on low-margin electronics turf where Kodak felt no competence and feared cannibalizing film.
- It was an inside executive culture, crystallized in the 1990 choice of film-lifer Kay Whitmore over the digital-minded Phil Samper. When Chandler retired, the finalists were Whitmore and vice-chairman Phil Samper, who had a deep appreciation for digital technology. The board chose Whitmore, and was explicit about why: as the New York Times reported, Whitmore said he would keep Kodak closer to its core businesses in film and photographic chemicals. Samper resigned and went on to become president of Sun Microsystems and then CEO of Cray Research — i.e., to lead exactly the kind of digital/computing companies Kodak was avoiding becoming.
- so when Kodak did get serious to compete in digital (in 1993 board made Fisher the CEO, he came from running Motorola and held an engineering degree plus a doctorate in applied mathematics) it did so as one commodity hardware maker among many and that was too late since film began to drop as digital started to pick up, exactly as Vince Barabba predicted in 1981
lern_too_spel 3 hours ago [-]
These people know about the innovator's dilemma. Their problem is incompetent product and people management, same as it has always been. Talk to anybody working on Gemini, and it's obvious that they're wasting a tremendous amount of effort and talent.
mitchell_h 21 hours ago [-]
I use anthropic's models daily, and sometimes switch to Gemini. Google is losing the marketing front BADLY, but their AI service is surprisingly great. It's far cheaper than anthropic for one. and for my kind of research it's just better.
lemax 20 hours ago [-]
I'm quite certain that Google's AI services are likely the most used in the world right now by virtue of having the widest distribution. It's in the search box. It's on your Android phone. Just because they aren't the preferred coding or research agent does not mean they are losing - that's a pretty small slice.
pineapple_opus 10 hours ago [-]
Yeah this seems true. Claude Code are famously dubbed as best AI coding agent, but google doesn't care about that niche I guess. Somehow, I still rely on google search as they have diversified it.
If you ask questions, it will enable "AI overview" , but if we search about particular object/platform like "Google stock" or "bbc news", it will give the old classic search experience and we woulnd't need to swallow "AI overview" pill in that case.
marysol5 9 hours ago [-]
I tried using Gemini CLI to sort some code issues for me, ran out of tokens mid-way through, even though I have Gemini Pro.
Turns out licensing is separate for "code" and "pro"...
freedomben 6 hours ago [-]
Same happened to me. That was the death knell for Gemini as a coding agent to me. I even paid for a whole year...
I highly suspect they opaquely lowered usage limits on me.
dansquizsoft 14 hours ago [-]
It can be everywhere, but that doesn't mean users are paying or even value it.
brookst 13 hours ago [-]
See also: Windows / Notepad / M365 / GitHub / Paint / Xbox / Azure / Solitaire / D365 / Security Copilot.
12 hours ago [-]
lanthissa 7 hours ago [-]
flash 3.5 is the best price/performance model for what i'm doing. I had been using opus for everything but as we started running many agents at once, and then eventually agent managing sub agents frontier is not an option.
we started model testing the cost/performance of our skills and agents and flash 3.5 wins in most things.
As people develop harnesses for their codebase i think the intelligence required comes down a lot.
enos_feedler 21 hours ago [-]
who cares about marketing when you have distribution? Probably a smart move to pump dollars into the product and not the marketing.
jgalt212 17 hours ago [-]
in high margin businesses, customer acquisition is everything.
SOLAR_FIELDS 16 hours ago [-]
If your product becomes commoditized, it’s no longer a high margin business
aethelraed 6 hours ago [-]
You can have a high accounting margin and a product with price equal to economic marginal cost—externalities, cost of capital, barriers to entry…
DRAM is a commodity but has (currently) a high margin.
mandeepj 15 hours ago [-]
> If your product becomes commoditized
Depends on the product - whether protein bars, salty chips, cellular service, or IPhone or something else. If your product has a flavor, it’s never going to get commoditized. Coke still tastes better than Pepsi.
collingreen 2 hours ago [-]
This is the power of a brand. Kirkland and some private label products are literally the same as the competitor products and yet are perceived differently. Even in your Pepsi vs Coke example, Pepsi routinely wins in blind taste tests but there are more "Coke people".
It will be interesting to see if the LLM companies can establish their own "brand" and how they will do that. LLM voice is a thing but not sure if it's a good thing people will use to hang their self identity on. Distillation of models and constant training also make this complicated. Claude code is winning on harness and ux right now but it seems precarious and also easy to commoditize. I think elon tried to add branding to his chatbot pretty intelligently by being iconically crude/evil/"anti woke" since it's both highly visible and less likely to be copied.
We live in fascinating times!
tempest_ 20 hours ago [-]
I have not tried the Gemini CLI in a few months but when I did it was a shit show.
Google makes it very hard to use their shit and it was full of bugs.
Anthropic's current run is based entirely around Claude Code in this space and the last time I used the gemeini-cli it wouldnt give me access to the latest models and I was paying them for the privilege
Tuna-Fish 20 hours ago [-]
Google trashed the Gemini CLI client and replaced it with agy (antigravity), which is written in go and is much nicer.
throwawaycan 14 hours ago [-]
Interesting you say that. Every user I speak to says antigravity cli is missing lots of features and Gemini cli was working quite well. Same for me.
Tuna-Fish 5 hours ago [-]
It's not as feature rich, but has also not crashed once for me, unlike gemini cli, which was a flickery, unstable mess.
I get the complaints in that thread but I still think it is hilarious. That repo is a gong show to random shit and perhaps one of the best worst examples of "opensource" LLM development.
marysol5 9 hours ago [-]
It will also just sit there "thinking" for ages, if whatever you are doing requires an input (like sudo)
Sometimes you have to tab across and give it a PW, but it seemingly is incapable of parsing that, and just asking.
Kiro, what we use at work, on the other hand will just prompt you. (And doesn't like taking credentials directly)
marysol5 9 hours ago [-]
We use Kiro (AWS) and Gemini (Google) at work.
Kiro is of course really good to back into AWS stuff, it knows more about AWS than Amazon themselves!
Gemini is really good at understanding my inane ramble and mis-spelling
vasco 21 hours ago [-]
Is it? My mom and all her friends use "the intelligence". What is it? Gemini, because it's on their android phone.
marysol5 9 hours ago [-]
Apple played a blinder by calling it "Apple Intelligence".
Well done lads
sumoboy 21 hours ago [-]
I think Google is a bit sandbagging here knowing they have all the data and likely better models hiding. My theory is it's a bit of not disrupting the stock market direction by exposing whose really the boss. If they can do it cheaper, faster, and better, people start asking questions, especially with upcoming IPO's.
mgfist 21 hours ago [-]
This makes no sense. Google is beholden to its own shareholders, not the markets at large.
In any case, it's well known that devs in Google have liked anthropic/openai models for coding more than gemini, so unless they're hiding their best models from the people within, I think it's just the case that they're behind.
hattmall 20 hours ago [-]
It's more that they know they can eventually clone any successes the other companies have and steal their market share. Their really is no moat. In a more normal environment they would be buyout candidates but that's a bit too far gone at this point, so you just let them run until they are out of gas and Google can benefit from any advances without upfronting the cost.
Even with anthropics record breaking revenue growth I don't see how the pure AI companies can sustain, but the catch-22 is that any obvious pivot proves that. This puts the more traditional tech companies in position to ride the back of the wave until the growth curve tops.
JumpCrisscross 20 hours ago [-]
> they know they can eventually clone any successes the other companies have
Google has gone all in on AI. To the point of challenging their own core product. Apple is waiting and seeing. Google is building and distributing, albeit with terrible marketing.
gizajob 18 hours ago [-]
Apple isn’t waiting and seeing on the hardware side, only implementing AI on the software side, which there doesn’t seem to be much of a demand for them to do. Apple are well set for on-device LLMs and agents with their Mx Max cpu/gpu, and their wait on the rest is saving them hundreds of billions by not burning all their profitability to the ground building Nvidia-filled datacenters the same as everyone else, which is why Google is now having to hunt for extra money by raising capital like this.
0gs 19 hours ago [-]
search is not their core product though, it's ads. they ain't challenging anything.
surajrmal 4 hours ago [-]
Ads are meaningless without a surface to show them on. Search is absolutely a core product.
lukeschlather 20 hours ago [-]
Coding is a pretty small slice of the markets in play. Google's models are driving cars right now. Using coding agents doesn't give much insight into performance in the broader world; I would assume assume Google is performing better in general even if Claude or Codex is currently outperforming for coding.
mgfist 2 hours ago [-]
> Coding is a pretty small slice of the markets in play.
I don't think that's true, mostly in that a lot of usecases are solved via coding models + a harness.
> Google's models are driving cars right now.
Yes + other models like alphafold. But those are (relatively) specialized models. Besides, the comment I was responding to was saying Google is sandbagging the market to keep it calm or something. I don't disagree that Google is doing well overall and has some clear advantages
s1artibartfast 18 hours ago [-]
Google also owns 15% of anthropic.
swores 6 hours ago [-]
Pedantic correction that doesn't change anything other than accuracy: it was reported over a year ago to be closer to 14% than 15%.
But I believe since then Anthropic have raised more money, almost certainly diluting Google's stake (I could be wrong and misremembering that Google didn't partake in the additional fundraising). I have in the back of my head that Google is down to something like 10% now, but don't have time to go and find details to fact check that, sorry!
WarmWash 17 hours ago [-]
It's important to remember that the cloud division, rapidly becoming Google's golden goose, does not give one fuck about Gemini and would happily sell out all of Gemini's compute to Anthropic and OAI if given the opportunity.
okdood64 4 hours ago [-]
> yet OpenAI and Anthropic are eating their pie
I'm actually impressed by how much the Hackernews crowd is sleeping on Google & Gemini. Yes, it's lagging behind in coding, but it's consistently much better and more reliable at literally everything else.
Also there was a period of time when Gemini was the best model out there...
anthonypasq 4 hours ago [-]
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tekacs 21 hours ago [-]
I don't think they 'index' videos, per se. They just point the model at the video's transcript on demand when you ask a question, I believe. Doesn't change any of your conclusions, though. You're absolutely right, they have an absolute ton of data.
gniv 8 hours ago [-]
> I don't think they 'index' videos, per se.
I'm pretty sure they do. They already index metadata (you can see it in the web search results) so indexing the transcript is relatively easy.
ApolloFortyNine 13 hours ago [-]
I'm guessing one goal of the semi recent AI translated subtitles on every video, is now every video has a transcription.
It's actually incredibly useful if you just want to summarize a video, or my use case, want a text tutorial of something that's a video.
marysol5 9 hours ago [-]
Their transcribing and summarisation of Google Meetings is pretty good.
I have a boss who loves to rattle on for ages, and it gives a breakdown of what on earth he was on about
onlyrealcuzzo 18 hours ago [-]
I wouldn't be surprised if Google's logs alone are a substantial portion of all data created daily...
marysol5 9 hours ago [-]
Some of the stuff that turns up on Googlebot, you really have to think "where on earth did you find that? Absolutely nobody, nowhere had a hyperlink to that"
monkpit 15 hours ago [-]
Do they even do logging in the traditional sense? Surely they have some bespoke googly solution.
sirsinsalot 8 hours ago [-]
I think Google is doing the right thing. Using LLMs for coding is the shiny low hanging fruit but it isn't what is going to make the tech ubiquitous. That'll be finding applications of it to real data problems.
Google knows LLMs are the new UI, not the new IDE.
jonwachob91 21 hours ago [-]
I've also asked the youtube ai about when some things are mentioned in videos, and upon verification the ai is just hallucinating.
amelius 8 hours ago [-]
> I'm actually impressed at how bad Alphabet is with LLMs
Not my impression. Lately I think Gemini is superior to ChatGPT and Claude in coding (I'm mostly using it with scientific stuff in Python).
tgsovlerkhgsel 13 hours ago [-]
My guess: The company culture means that the best people went to other companies.
marysol5 9 hours ago [-]
Google has been diabolical with forming teams to develop a product, then disbanding the team, and then moonlighting the product right after deployment.
cries in Google Glass
Wild that Meta has that product now decades later, which isn't even half of what Google offered.
alecco 10 hours ago [-]
> They know Google has a ton of data to train LLMs on.
And they have a massive amounts of TPUs. And yet... their models are way behind.
logicchains 9 hours ago [-]
Google doesn't suck at LLMs, they suck at customer service. There was a period where Gemini Pro was the best LLM out there, before they gutted it with quantization. It's like they didn't realize that "provide a great product, get people hooked then cut the quality" doesn't work when switching costs are so low. As with GCP, putting the wants of SREs over the wants of customers is not how you gain lots of customers.
marysol5 9 hours ago [-]
How good is YT's data though? Have you seen their Auto Caption? It's utterly incapable of understanding speech.
Auto Dubbing on the other hand is incredible, translating Russian/Ukranian speech with different voices and accents for each speaker, during a fire fight is wild.
gniv 8 hours ago [-]
> Have you seen their Auto Caption? It's utterly incapable of understanding speech.
How recently have you looked? I think nowadays it's quite good.
hirako2000 8 hours ago [-]
That voice though is atrocious.
f0rgot 18 hours ago [-]
Are you sure it’s not using transcripts? That would be equally useful but technologically less impressive.
tayo42 17 hours ago [-]
Turning all of those annoyingly verbose and long YouTube videos into text that could be searched, summarized and referenced easily would be amazing
CamperBob2 21 hours ago [-]
Not only that, but the same webmasters who try to shoo AI crawlers away actively court Google's bots.
cj 21 hours ago [-]
Really? Every business owner I know outside of HN wants to be discoverable by LLMs.
iamacyborg 21 hours ago [-]
Being discoverable is one thing, having your content stolen wholesale is another
losvedir 18 hours ago [-]
Most of the economy is not journalists or people who sell "content" online. In most cases I can think of - retailer, restaurant, hotel, plumber, any local small business, they want their content ingested. That means the AI chatbot knows about them and they can be in answers potentially.
Polizeiposaune 21 hours ago [-]
And having your content rendered inaccessible to humans by a DDoS attack from overly aggressive webcrawlers that ignore robots.txt is yet another.
20 hours ago [-]
TacticalCoder 6 hours ago [-]
> I'm actually impressed at how bad Alphabet is with LLMs ...
I'm still on Anthropic models to code but I'm on Gemini 3.5 Flash for everything else. How can you say Google is bad at LLM when their little flash model is literally SOTA on many benchmarks?
> ... yet OpenAI and Anthropic are eating their pie.
They're eating nobody's pie: it's a new pie. Google is a $4.5 trillion company, the 2nd biggest in the world as I type this.
Seen that fact and seen how good Gemini 3.5 Flash is, I'm not really sure Google is "bad at LLMs".
rvba 7 hours ago [-]
Alphabet still cant fix search in Android Play store, so it works
wffurr 5 hours ago [-]
You are assuming that Play store search is even broken from their perspective. I bet all their internal signals on it are positive, as in they make money on the fraud and scams, and crack down occasionally just enough to retain user trust.
imtringued 12 hours ago [-]
Youtube has had AI generated transcripts with autotranslation for the subtitles for years, not to mention the forced AI dubbing on mobile phones.
Doing a little bit of RAG on the transcript hardly sounds impressive.
hirako2000 8 hours ago [-]
Yet, Gemini can't even get YouTube URLs right half of the times.
ecommerceguy 18 hours ago [-]
pretty sure its only for videos with cc enabled.
MagicMoonlight 21 hours ago [-]
Everyone mocked them for paying for YouTube for years with no real income. Now it’s the most valuable data source in the world.
nimchimpsky 11 hours ago [-]
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JumpCrisscross 20 hours ago [-]
It's genuinely interesting to see Google fund this with equity versus debt.
panarky 17 hours ago [-]
It's also interesting watching Alphabet buy back $100 billion of stock over the last two years, when the price was half what it is today, only to turn around and sell shares now at the higher price.
I know GAAP accounting won't recognize any capital gain on these treasury operations, but from an economic standpoint this financial judo creates a lot of value for existing shareholders.
lanthissa 7 hours ago [-]
this is the finance team doing a fantastic job. keep in mind they're raising this cash right before 3 major ipos in their sector which people will need to raise money for and will fight against htem in the narrative.
If i was a google cfo and was trading at a premium to my peers before that, i'd want to raise the cash now. Look at MSFT, they're trading at 25 forward p/e and were buying back shares at 40. If they have to issue equity over the next few years the spread between teh performance of the 2 cfos could be 40-50b on that alone.
I think the point OP was trying to make is when a person "buys low sells high" they pay taxes on the gains.
jamestimmins 16 hours ago [-]
My first thought was my finance professor telling us that companies always raise with equity when they think their equity is overvalued.
ip26 15 hours ago [-]
You’d think Berkshire would be at least passingly aware of that principle, though.
gen220 14 hours ago [-]
It’s not easy to buy such a large tranche of shares at a fixed and fair price in a single transaction!
Both parties get something they want this transaction. Alphabet gets the Berkshire halo effect and a guaranteed buyer of $10 billion worth of equities, Berkshire gets a large tranche of equity at a price they believe is fair.
I think they view Alphabet as their next Apple, and a relatively safe place to ride out whatever happens with AI: Alphabet is fairly well positioned for the upturn or the downturn, especially now with this expanded warchest of cash.
minraws 11 hours ago [-]
They are buying 10B$ worth of shares for 10% discount from current valuation, and if their goal is to hold for 10-20 years, then it could be a good hedged buy in favour of AI.
Even if AI crashes 90% SpaceX, OpenAI & Anthropic are worth say 200B each post IPO. In 10-20 years with similar effects to Internet they might be the next Meta. Apple, Microsoft of the world.
But Google will likely still be the leader if it can make good on it's advantages.
lanthissa 7 hours ago [-]
Just as a google shareholder, this company bought back shares hand over fist at a low p/e for a few years, issues 100 year debt at low rates, and is selling equity when its at a premium to its peers right before 2-3 major ipos of competitors put selling pressure on the stock for a while.
I don't know who's going to win the llm battle, but googles finance team has been doing their job fantastically.
3ffd 19 hours ago [-]
Really? lol.
Tech firms should always have a buffer and never get too close to the optimal debt ratio.
I think they have learned a lot re. what happens if you are asleep at the wheel now.
JumpCrisscross 19 hours ago [-]
> Really?
Yes. Their competition is deploying debt and Google has low leverage. They also have $100+ billion cash on their balance sheet.
> Tech firms should always have a buffer and never get too close to the optimal debt ratio
...why is this especially applicable to tech firms? (Or a tech firm like Google?)
swyx 16 hours ago [-]
google stock is $376 a share rn. berkshire got a favorable discount here. is this... normal? they didnt have an obligation to offer it to the market to find the best price?
gniv 8 hours ago [-]
The deal might have been signed a month ago, just before earnings, when the stock was about that price.
pm90 16 hours ago [-]
if they sold that much in the open market it would probably decrease the price
10 hours ago [-]
simpsond 16 hours ago [-]
Large block trades happen off exchange often. Secondaries like this are common enough.
christkv 6 hours ago [-]
Why are they able to do this without offering it to the market being a public company.
cmiles8 6 hours ago [-]
These special placements are essentially a form of financing.
bix6 21 hours ago [-]
> The ATM program is intended primarily to facilitate, for a period of time, an administrative
change in how Alphabet meets tax obligations associated with employee equity grants. This
approach will mimic a “sell to cover” model: upon vesting of restricted stock units, shares will
still be delivered to employees net of taxes, and the company will use corporate cash to settle
taxes on behalf of employees. The company intends to issue stock for equivalent proceeds
through its ATM program.
This is an interesting change. Essentially just gives more timing control?
exabrial 15 hours ago [-]
Question from an outsider: my perception is Google has lost $80b in excessive spending on teacups. I never thought I'd see them attempt to raise money, seems like they've always had an unlimited pile of it. Why is this necessary for them?
missedthecue 14 hours ago [-]
If they can issue shares at ~30x earnings and deploy it in an accretive way, what is the argument against doing this? It's incremental ROIC below your cost of capital. One of the smartest things you can do in business.
exabrial 14 hours ago [-]
But why finance it at all if you have (I assume) the cash laying around? That seems a tad risky if the bet doesn't work out.
Not nitpicking your answer, I just don't understand.
missedthecue 14 hours ago [-]
Offering shares doesn't introduce balance sheet risk like debt does. There is no interest expense. You dilute the shareholders by about 1.67% but if this $80b can be deployed in a way that increases the value of the firm by more than that amount over the long term, it creates value and makes everyone better off, including the diluted shareholders.
The risk if it doesn't work out is that everyone gets diluted 1.67%
tguedes 2 hours ago [-]
They don't have the cash laying around. Their "actual" profit, meaning money added to their bank account after stock buy backs, dividends, employee stock allocations, and capex was $7B.
In this statement, their 2025 capex was $91.45B. They expect their 2026 capex to be $180B-190B. And they expect their "2027 capital expenditures to significantly
increase compared to 2026."
So they simply don't have the money. Up until now, I thought the bubble talks about AI were silly because all these companies were using cash flow to fund their capex. These numbers are so astronomical now that a company that had $132B in net income has to take debt or issue stock to pay for it.
greesil 14 hours ago [-]
If you were anticipating the stock to drop sharply in the future, this may be cheaper.
bandrami 9 hours ago [-]
You sell equity now if you think equity is going to be worth less in the future
aorloff 14 hours ago [-]
It would be prudent, not necessary.
Capital raising is best done when markets are favorable, and Alphabet has the ability to choose how and when to raise.
Recall the froth of follow-on offerings hot circa 2000
jbs789 9 hours ago [-]
I think you’re spot on.
If you think they know what they are doing, then why are they selling shares now instead of issuing debt? They must either be maxed out on debt issuance or believe the cost of equity (future equity returns) are low.
merelydev 10 hours ago [-]
That's 80B that doesn't go to OpenAI or Anthropic.
jbs789 9 hours ago [-]
That’s interesting. Being in the market now does shine a light on the difference in the businesses and says “we are here too!”…
Interesting how the market has reacted to this news (down 1.7% after hours)
tptacek 21 hours ago [-]
Well, I mean, you'd expect this move to mechanically push share prices down.
B-Con 17 hours ago [-]
They added $80 out of a $4.5T market cap, which means redistributing ~1.67% of value from shares outstanding to the new shares.
So being down 1.7% is literally exactly what you'd expect.
asdfaoeu 12 hours ago [-]
Not at all since the company is also +80bn cash.
dnnddidiej 9 hours ago [-]
But they are about to set it on fire?
But null hypothesis p=0.3 or something right?
HDThoreaun 11 hours ago [-]
Only if shareholders think google is gonna light the money on fire
addaon 21 hours ago [-]
Why? There’s $80B of dilution from new shares issued, so to keep share prices constant market cap would have to increase by $80B. Simultaneously, there $80B in additional assets on the balance sheet, so if the company was previously correctly valued at $N market cap it would now be correctly valued at $N+$80B market cap, right? My intuition is that capital raises, just like stock buybacks, should be first-order (“mechanically”) share price neutral.
nostrademons 21 hours ago [-]
First-order, yes.
In practice there's a lot of issues with asymmetric information. The company knows its own operations and financial position better than random traders on Wall Street. It is rational for it to buy back stock when the market value is lower than the true intrinsic value of the company, and to sell stock when the market value is higher than the true intrinsic value of the company. Therefore, traders often treat buybacks as a signal that the company is "cheap" (at least in the company's own view) and pump up the price accordingly, and treat stock issuances as a sign that company management believes that the stock is "expensive" and push it down accordingly. Company management has more inside information than market participants do, but is usually prohibited from trading on it. Stock issuances and stock buybacks are one of the few cases where insider-initiated trading is legal, because the benefits accrue to the company as a whole rather than a few individuals.
hollerith 18 hours ago [-]
I agree, and traders will also take into account the fact that there is a gold rush going on (into AI) and consequently view this issuance as not as much of a sign that company management believes that the stock is expensive as they would have if no gold rush were going on.
mgh95 21 hours ago [-]
This is true in a "yes but" sense. Typically equities of the mega caps benefitted from debt issuance on the expectation it would accelerate growth. The change to equity value loss is what is interesting: the market no longer sees this as generating growth, at least not like it used to.
jsnell 21 hours ago [-]
But stock buybacks shouldn't be price-neutral by default? The entire point is to increase the unit price of the remaining shares.
And in this specific case, selling shares to Berkshire at a 5% discount has a pretty clear signalling effect.
paulddraper 21 hours ago [-]
In theory a buyback is price neutral.
The company has less cash in the balance sheet, so its market cap decreases. But there are fewer shares, so the share price is the same.
(This allows hypothetical future growth to disproportionately benefit existing shareholders, but does not intrinsically increase stock price.)
In practice, like another poster pointed out, it signals the company’s belief that its own shares are undervalued, so the market usually increases its estimation of value.
k22 20 hours ago [-]
(intrinsic) value neutral not price.
price is more broad and brings in supply vs demand effects.
fancyfredbot 20 hours ago [-]
In theory a dividend is also price neutral. You have the dividend now but the company you owned doesn't any more.
However, if someone gives you a dividend you typically have to pay tax, and lots of people really hate paying tax.
So buybacks are the preferred price neutral way of dealing with excess cash.
asdfaoeu 12 hours ago [-]
Dividends are absolutely not price neutral however most feeds correct for them.
paulddraper 19 hours ago [-]
The dividend amount plus share price is neutral.
But before-paying-dividend versus after-paying-dividend decreases the value of a share.
tjwebbnorfolk 20 hours ago [-]
Ok but GOOG also has a ~$70B per year stock buyback program for that. It's a little goofy to be buying back and issuing $80B of new shares at the same time.
HWR_14 19 hours ago [-]
SpaceX has been buying back employees stock and issuing new stock to investors. So have a lot of private companies.
tb99 21 hours ago [-]
Supply and demand of Google equity. The fundamental value of a share doesn't change, but you now need more investor capacity to hold the equity. So you need to sell to investors who weren't quite willing to pay the previous price.
It's not based on the fundamental value of the stock so maybe you wouldn't consider it "first order," but I think you can still call it "mechanical."
gbnwl 21 hours ago [-]
Don't forget that the denominator (total number of outstanding shares) will be increased by this as well. So even if the market cap reacted exactly one to one like you're proposing the per share price wouldn't stay constant necessarily.
addaon 20 hours ago [-]
That's exactly the point... the total number of outstanding shares increases, as does the capital value. These changes should cancel out.
panarky 17 hours ago [-]
Maybe the market price drop has less to do with dilution, and more to do with suspending share buybacks for a while.
mgh95 21 hours ago [-]
Sure but people are no longer expecting these kinds of actions to generate equity gains. Before it was expected the growth would outpace the cost of capital, leading to equity appreciation. The directional change is what is interesting.
Sol- 21 hours ago [-]
Very interesting. Often I only perceive the stock market as existing equity changing hands and the stock value of the company not being immediately relevant for its success (it's just third parties trading ownership around, after all), but I rarely heard of cash raises for the company after the initial IPO - of course only because I didn't pay attention and mostly IPOs make the news.
It's insightful to put such documents into Claude and see how they use many different financial mechanisms to raise the money. $15B sold directly to the big banks, $40B sold to the market (but also facilitated by these banks), a direct investment (PIPE) from Berkshire. Pretty cool how financial markets do these things.
missedthecue 14 hours ago [-]
excluding IPO proceeds, existing public companies in the US raise about $200B a year through selling shares on stock markets. This DOES NOT include stock-based comp, which is simply another form of funding operations post-IPO using public markets.
Stock based comp is another $350B a year in US markets alone. So if you think about public markets as an avenue for companies to raise capital, post-IPO firms are doing it to the tune of more than half a trillion a year.
21 hours ago [-]
afavour 20 hours ago [-]
It’s difficult to avoid the feeling that a horrible financial reckoning is on the way.
All these big tech firms are spending wildly to make sure they are the one on top at the end of it all. But whoever that ends up being there’s going to be one hell of a lot of fallout underneath them.
impulser_ 18 hours ago [-]
Yeah, but Google has the money for this. They are quite literally the most profitable company in the world. They are only raising because they don't want to harm there other businesses buy eating up their capital for this.
Why do you think there will only be one winner?
dsl 9 hours ago [-]
> Yeah, but Google has the money for this. They are quite literally the most profitable company in the world.
"Alphabet announced that its 2026 capital expenditures are expected to be $180-$190 billion, and that it expects 2027 capital expenditures to significantly increase [...] over the 12 months ended March 31, 2026, Alphabet generated $174 billion of operating cash flow"
schonfinkel 9 hours ago [-]
And it's not just AI, we're riding atop a previous finance + crypto bubble that didn't properly pop up.
m463 19 hours ago [-]
Personally I wonder if these AI services will have a different price soon.
Like how the early railroads or oil companies shook out and cost more than expected.
tracerbulletx 18 hours ago [-]
Maybe, but inference costs can come down too with more purpose built hardware and continual optimization and quantization strategies.
an0malous 17 hours ago [-]
Especially because LLMs have no moat and they’re strategy is basically “we’ll figure out AGI first”
topkai22 16 hours ago [-]
I feel there is a strong argument that if we described the capabilities of agentic systems today to someone from 2002, they’d say we’ve achieved AGI. It’s just not as impressive as we thought it would be.
At least not yet.
riffraff 10 hours ago [-]
indeed, I know this is not actually AGI, I know it hallucinates and it's not reliable in all situations, buy any of today's LLMs would appear magical to anyone from 20 years ago.
owebmaster 7 hours ago [-]
It appears magical to us too. It just gets boring fast and the same would happen with the people from 20 years ago
isomorphic_duck 12 hours ago [-]
I would say continual learning is the big missing piece that someone even from 2002 would realise.
sayamqazi 11 hours ago [-]
tbf producing coherent answers to questions (even if sometimes inaccurate) was perceived to be an almost impossible task a decade ago.
quantumink 11 hours ago [-]
[dead]
onlyrealcuzzo 18 hours ago [-]
I don't understand where this $80B, +$150B for SpaceX, +$??B for each Anthropic and OpenAI is going to come from.
There's not that much cash sitting around.
Something is gonna need to get sold to transfer into those assets.
Unless central banks are just going to print money to invest in these companies, I don't know who else is going to be able to take on enough debt to prevent massive sell offs somewhere for this.
It's not like ~$400B is pocket change...
mbesto 17 hours ago [-]
(1) There is currently $1T in dry powder in private capital markets
(2) Middle east oil money (Saudi Aramco's profit every year is $100B+)
(3) Public traders have been and are looking to cycle out of other investments into higher growth areas.
bandrami 9 hours ago [-]
Oh hey, so about that Gulf oil money...
impulser_ 18 hours ago [-]
I don't think you understand the size of the US capital market. We are talking probably ~150 trillion.
It's easy as fuck for Google to raise this money because they are a money printing business. They are the most profitable company in the world, so for anyone this is basically the same as buying US debt.
onlyrealcuzzo 17 hours ago [-]
> We are talking probably ~150 trillion.
Yes, but we are talking about liquidity not valuations...
WarmWash 17 hours ago [-]
Believe it or not there is actually a shortage of assets and an excess of money. That's in part why valuations are so bonkers.
impulser_ 17 hours ago [-]
This is equities + bonds which are pretty liquid assets.
Interesting timing with the Spacex/Anthropic/OpenAI ipos coming up
PessimalDecimal 13 hours ago [-]
Probably not so coincidental!
At least part of this is slated for employee stock comp. Could be to keep their talent from running.
i_have_an_idea 21 hours ago [-]
so, at a 8% discount at current prices.
swiftcoder 21 hours ago [-]
How is Alphabet suddenly short of capital?
chatmasta 21 hours ago [-]
You don’t raise money because you’re short on capital. You raise when you’re in a position of power and capital is cheap.
sandeepkd 21 hours ago [-]
Or if you think that you may not be able to raise this kind of money if the AI story goes down after all these IPOs
AndrewKemendo 21 hours ago [-]
Both of these tell the actual market position:
1. There’s real profit/value expected in pursuing the full automation of the labor market to the extent that the Board will approve large debts to known allies (BH) who only invest in long term infrastructure.
So they are investing in more AI infrastructure with long term capital because they see the payoff in the long term.
2. That also means they aren’t doing market moving plays in public like selling corporate debt because they don’t want to be in the short term froth with a long term bet.
ilteris 20 hours ago [-]
They already have shitloads corp debt. They don't want to over leverage.
AndrewKemendo 20 hours ago [-]
Agreed! Any public debt is going to be chaotic the next few years most likely
ilteris 21 hours ago [-]
Capital is cheap how? Are you saying they think capital would get more expensive?
fancyfredbot 20 hours ago [-]
Capital is cheap for Google because they are making a lot of money and they have very little debt.
They are considered a very low risk and can borrow for a long time at low rates. They recently issued a 100 year bond.
They seem to have decided to issue equity rather than borrow more. This is probably so that they can maintain the ability to borrow very cheaply in future if necessary.
ilteris 20 hours ago [-]
Sorry I am not buying into that. In your logic they should issue more debt. Their operating margin is lowest compared to Microsoft and meta. If oil goes to 200 tomorrow their profit margin will be squeezed most along with meta. (Ads) Backlog in cloud does not mean shit imo. They can slow roll it. Matter of fact half of that backlog seems backed by anthropic anyway. So imagine anthropic not making money because of a down turn and going down. Who will pay the backlog? This is exactly why they are diluting their stock instead of issuing more debt, they don't want to put all their eggs in one basket and want to retain capital for such downturn. That's how I read it.
hustwindmaple 16 hours ago [-]
They've already issued $80B in 6 markets/currencies. How much more do you think they can raise at a decent rate? I think they might issue more next year.
Issuing new equity might be a financial engineering experiment. No other mag7 has tried it. Plus they got BH name on the plate.
skybrian 15 hours ago [-]
More money for less stock, because Google’s stock has gone up in price. By contrast, a stock buyback makes sense when the stock is cheap.
So I guess Google doesn’t think their stock is particularly cheap, but Berkshire Hathaway wants to buy more anyway. (At a slight discount.)
H8crilA 21 hours ago [-]
Latest filing, as of end of March 2026, shows $126.8B in total cash, cash equivalents, and marketable securities:
Not all cash is fungible for CapEx. For instance, much of that might hypothetically be held in an offshore account. Building a datacenter with it would trigger unfavorable VAT or sales tax or something... Hypothetically...
High cap companies use debt for this: bank loan is located in the market where it's needed most, and the debt is serviced by interest earned from securities in other markets. The net taxes are a small percent (think 3%) relative to simply transferring funds within the company. Yes, this is the low effective tax rate the EU is quite upset about.
Other reasons for not touching their holdings usually have a similar explanation. The securities are fungible for accounting purposes but not fungible enough for actual day-to-day operations. Result: securities get "stranded" and the large company grows a hedge fund appendage.
Yokohiii 6 hours ago [-]
Yeah, for profitable companies, debt is a strategic tool not a desperate act. It more about orchestrating around the money that is soft locked somewhere else.
roxolotl 21 hours ago [-]
These companies have pivoted from being cash generation machines to being data center building companies. It’s a huge bet that might pay off but the market is starting to notice that where there used to be revenue generation there is now infrastructure spend.
missedthecue 14 hours ago [-]
They have $100B on the balance sheet. The best time to raise capital is when you don't need it, and the worst time is when you desperately do.
whatever1 21 hours ago [-]
Nobody has the capital to casually invest 200B PER YEAR, in cash, for multiple years.
Literally nobody.
gizajob 18 hours ago [-]
Masayoshi Son does a pretty good job of setting about that much cash aflame every year.
ycui7 20 hours ago [-]
maybe it is wrong to spend 200B every year continuously to begin with.
whatever1 20 hours ago [-]
Also I don’t think any of these companies has handled big capex programs in the past (maybe AWS a bit since Amazon is building things, but it did so incrementally), aka they don’t have the institutional knowledge to manage the risk associated with it.
Semiconductor/ Big Oil/ Rail/ Telco have.
fragmede 19 hours ago [-]
If you're going to bring up CapEx, Cloud is entirely a CapEx vs OpEx play so AWS and GCP are entirely familiar with the risks there. AWS dates back to 2006 and Google was building data centers long before GCP was public. Smaller, sure, but their finance team understand CapEx and OpEx well.
whatever1 19 hours ago [-]
I don’t think I agree. Cloud has not faced (yet) a serious downturn.
I can invest perfectly in an always up market.
JumpCrisscross 19 hours ago [-]
> Cloud has not faced (yet) a serious downturn
2008 wasn't a serious downturn?
swiftcoder 12 hours ago [-]
GCP didn't launch until 2008, and AWS was only a small cluster of core services before that point. I don't think it fair to say that either platform really had to weather that crisis
bpodgursky 21 hours ago [-]
The market wants to put money into AI.
The market thinks Alphabet is most able to efficiently turn $80B into more money by investing in AI infrastructure.
So, Alphabet is happy to oblige them, given the favorable terms.
SXX 20 hours ago [-]
More likely Berkshire Hathaway knows that investing into Alphabet isnt just gonna end with -100% of investment when bubble pops.
newsclues 18 hours ago [-]
Preparing for acquisitions?
SecretDreams 21 hours ago [-]
Are we watching the same AI capex spending choices over the last 1-2 years?
Every company from megacorps to small fish are spending well in excess of profits on these capex expansions. No ROI timelines yet established....
hobofan 21 hours ago [-]
Google has a committed cloud compute backlog of $462b. That's their compute buildout for the next ~2.5 years completely financed.
bunderbunder 21 hours ago [-]
I could have paid cash for my car, but that would have been a bad move. I wouldn’t have had any liquid assets left over for getting me through a rainy day. The interest I paid on the loan was an acceptable price for reducing my overall risk exposure.
Even if Alphabet has $80B sitting in the bank, they could quite reasonably arrive at a comparable decision.
Fire-Dragon-DoL 16 hours ago [-]
This means they are buying more hardware and us gamers have to suck it up for 10 more years?
thisisauserid 16 hours ago [-]
They do buy a ton of Nvidia but they seem to want to make their own chips more and more.
topkai22 16 hours ago [-]
Which will take up fab capacity all the same. All the chips come out of the same TSMC (or possibly Intel) fabs
casey2 5 hours ago [-]
I think people don't understand that the value of the data generated by chats/agents is conservatively worth $200B a year. This is the so-called data-flywheel. Google is going to keep spending until they hit the break even point.
More than a quadrillion high quality tokens per year. Pretty soon they will have an automated team of scientists doing basic and advanced research in every field. All those tokens will be fed back and make the model much more inference efficient.
dgan 9 hours ago [-]
So they are buying another 32GB RAM stick, interesting
greatgib 8 hours ago [-]
It looks crazy that with all the cash they have at end they can't sustain the cost of their own investments by themselves.
ycui7 20 hours ago [-]
so google had spent too much money to build their own datacenter?
andrewstuart 12 hours ago [-]
I thought Google was a cash machine what happened to that.
1298716 21 hours ago [-]
[flagged]
protocolture 18 hours ago [-]
Hey 3 hour old account, how will we keep you accountable when they successfully IPO? Like I am a downer on these companies too but idiots are lining up to buy.
deathanatos 17 hours ago [-]
They are stating they believe they're one of like the top 10 or 20 biggest companies in the world, across all industries. The statement is ludicrous.
… but as you say, idiots are lining up.
protocolture 15 hours ago [-]
The market can stay irrational longer than you can stay solvent or whatever.
iamacyborg 21 hours ago [-]
> It is odd that they cite customer demand just after people leave Google for DuckDuckGo due to AI enshittification.
You’ll probably find this is extremely limited to whatever circle you find yourself in
argee 18 hours ago [-]
As long as the default on Chrome, Firefox, and Safari is Google, I doubt any of this "retaliatory flight" registers as even a blip.
verdverm 20 hours ago [-]
The other thing people do is associate google only with their consumer facing products. Their cloud business is growing like crazy and they have the best Ai chips for running efficiently/economically at scale (TPUs, vertical integration). There's a reason they run everyone's models better than they can themselves on nvidia cards
tweaktastic 21 hours ago [-]
> After the probable IPO failures of SpaceX, OpenAI and Anthropic no one will give them money.
People are going to line up for all of them. Hype sells these days.
dyauspitr 18 hours ago [-]
No one is using DuckDuckGo. Those IPOs are going to go gangbusters, atleast for a while.
nalekberov 21 hours ago [-]
We will soon see "improved" 'AI Mode' most likely.
dude250711 21 hours ago [-]
Yep, another investment into Duck/Kagi PR push - money well-spent.
In addition, Alphabet has reached an agreement to sell $10 billion of stock to Berkshire Hathaway Inc. in a private placement, comprised of $5 billion in Class A Common Stock at a price of $351.81 per share and $5 billion in Class C Capital Stock at a price of $348.20 per share.
This investment by Berkshire Hathaway adds to the position it has built since Q3 2025.
Recently I have been asking YouTube's new AI about some videos ("when is Steam metrics mentioned in the video?" for example), which means they also index videos. This is an unthinkable amount of data.
I'm actually impressed at how bad Alphabet is with LLMs since they invented the thing as we know AND have all the data to train on, yet OpenAI and Anthropic are eating their pie.
Google's main revenue is ads based on search. LLMs are a competitor to search. Creating better LLMs will cut into search volumes.
In any large organisation this is extraordinarily difficult to manage - they have to incentivise the new tech that is actively harming the current revenues, while maintaining as much of the old revenues as possible, without creating internal conflict between these two parts of the organisation that will kill it.
Though in fairness to Google they do seem to realise this and are trying to adapt - they're letting the LLM folks mess with search. It'll be interesting to see how this goes.
Sundar and many of his executives have certainly read or heard of The Innovator's Dilemma, and I expect they're all moderately paranoid that it will be their downfall.
Also, that's not it. Google has a great ai app called Gemini where they have at various points hosted the top ai image generation model (certainly for speed, and for a while for accuracy) and have innovated with features like deep research
They are monetizing their ai conversations more effectively than OpenAI could dream of via ads and chat in Google search.
They are heavily investing in compute and talent.
When they've added llm results to Google search it has _increased_ engagement and re-engagement.
What part of the competition are they blissfully ignoring?
(I have counter arguments to some of these points, but I would rather hear other people's)
Are they actually implementing ads in chat yet? I haven't seen an ad in Gemini yet.
Again, the results I've seen is that LLM results in search have resulted in more zero-click searches (as a proportion of all searches), which isn't increasing engagement? But again, I may be wrong, what are you basing your assertion on?
I didn't say they were blissfully ignoring anything. I gave them credit for knowing the situation they're in and doing something about it.
The problem that I was talking about (probably badly getting my point across) is that it's internal conflict and strife that causes the pain here. One part of the company is incentivised on increasing revenue on the existing business. The other part of the company is incentivised on increasing revenue for the new business. But the new business is at the expense of the old business, so it sets up internal conflict where each part of the business tries to protect its own incentives. And Google has always been afflicted with rife internal politics.
ChatGPT's growth is incredible, but they essentially have to get all of their growth from inside codex or ChatGPT apps. Google can auto query Gemini with every search. There's an interesting piece of data which is that this tells them (on a conditioned basis^^) when is the chat result more effective than the search and vice versa?
Google can force growth of Gemini by leveraging their existing properties. This is a huge asset, and if you're wondering why Meta has artificially high usage of their LLMs it's because distribution is hard and Meta and Google have a lot of surface area to distribute on
^ no, I don't mean this as a compliment, although it does lend credence to the idea that Google is willing to update its current products with AI.
^^ ie conditional on the user's willingness to view the chat result
Have you seen their Cloud business?
Moreover, Google has continued to drive search growth since ChatGPT arrived and is executing competently. Their models are good (not great), but they have enough compute and one of the best ML-focused chips such that they aren't beholden to Nvidia (instead, they're beholden to fabs: tsmc - this is a much better dependency since Nvidia is hell bent on extracting as much value as they can from their position in the stack and it would be against the nature of tsmc to behave similarly)
Will Google's ad revenue decrease? Advertising is an incredible business because it is anti fragile.^ Even if search revenues decrease from their current highs (I would bet heavily against this), they still have YouTube with shorts and a robust display ads business that is going to improve if AI supercharges the economy (more companies - # startups founded in Jan 2026 is much higher than # founded the previous January, more products, advertising and distribution become the differentiators for these products)
If you're wondering how anthropic is going to continue to grow its base, the answer is advertising. In fact, Google is situated to fundamentally support everything that anthropic needs. Who cares if they make worse margins than anthropic? They'll benefit from the entire ride up, and they'll do the same for the next startup of that scale.
^ https://stratechery.com/2024/metas-ai-abundance/
coding models? their own devs use claude code.
Google is well positioned to earn from this service, especially if they can prove that their search service is superior to competitors. While they lose some of their moat, they are well positioned to dominate the market, just like they did in the consumer space.
People asking any AI chat interface for ideas for their honeymoon will trigger some kind of search. SEO is still relevant and Google might still be able to sell top spots in their search so LLMs will pick it up.
"You tried to find a recipe for cupcakes, well all I can offer you is an advert on kitchen appliances"
Some already do, and some of the ones that don't will in the future.
See for example https://help.openai.com/en/articles/20001047-ads-in-chatgpt
Of course that's not to say that the advertising situation will be identical to that of pre-LLM search engines, and the differences may lead to radically different economic models and user experiences. But I was just correcting your statement.
a bit more nuanced take on the failure would also account for executives backgrounds at the critical period:
- in 1981 Vince Barabba — Kodak's Head of Market Intelligence — conducted an extensive internal study that explicitly concluded digital photography could replace film and that Kodak had approximately 10 years to prepare for the transition.
- Kodak's leadership in 1980–1993 saw the company through the lens of its founding identity — silver-halide chemitry, precision coating and manufacturing, and the extraordinarily high margins of the film-plus-processing business. This identity-driven decade was spent on failed diversification and defending film instead of building an electronics cost structure and a defensible high-margin position. They steered capital and attention toward businesses that fit that self-image (specialty chemicals, pharmaceuticals, hybrid film products) rather than toward digital cameras, which meant fighting Sony and Canon on low-margin electronics turf where Kodak felt no competence and feared cannibalizing film.
- It was an inside executive culture, crystallized in the 1990 choice of film-lifer Kay Whitmore over the digital-minded Phil Samper. When Chandler retired, the finalists were Whitmore and vice-chairman Phil Samper, who had a deep appreciation for digital technology. The board chose Whitmore, and was explicit about why: as the New York Times reported, Whitmore said he would keep Kodak closer to its core businesses in film and photographic chemicals. Samper resigned and went on to become president of Sun Microsystems and then CEO of Cray Research — i.e., to lead exactly the kind of digital/computing companies Kodak was avoiding becoming.
- so when Kodak did get serious to compete in digital (in 1993 board made Fisher the CEO, he came from running Motorola and held an engineering degree plus a doctorate in applied mathematics) it did so as one commodity hardware maker among many and that was too late since film began to drop as digital started to pick up, exactly as Vince Barabba predicted in 1981
If you ask questions, it will enable "AI overview" , but if we search about particular object/platform like "Google stock" or "bbc news", it will give the old classic search experience and we woulnd't need to swallow "AI overview" pill in that case.
Turns out licensing is separate for "code" and "pro"...
I highly suspect they opaquely lowered usage limits on me.
we started model testing the cost/performance of our skills and agents and flash 3.5 wins in most things.
As people develop harnesses for their codebase i think the intelligence required comes down a lot.
Depends on the product - whether protein bars, salty chips, cellular service, or IPhone or something else. If your product has a flavor, it’s never going to get commoditized. Coke still tastes better than Pepsi.
It will be interesting to see if the LLM companies can establish their own "brand" and how they will do that. LLM voice is a thing but not sure if it's a good thing people will use to hang their self identity on. Distillation of models and constant training also make this complicated. Claude code is winning on harness and ux right now but it seems precarious and also easy to commoditize. I think elon tried to add branding to his chatbot pretty intelligently by being iconically crude/evil/"anti woke" since it's both highly visible and less likely to be copied.
We live in fascinating times!
Google makes it very hard to use their shit and it was full of bugs.
Anthropic's current run is based entirely around Claude Code in this space and the last time I used the gemeini-cli it wouldnt give me access to the latest models and I was paying them for the privilege
https://github.com/google-gemini/gemini-cli/discussions/2727...
I get the complaints in that thread but I still think it is hilarious. That repo is a gong show to random shit and perhaps one of the best worst examples of "opensource" LLM development.
Sometimes you have to tab across and give it a PW, but it seemingly is incapable of parsing that, and just asking.
Kiro, what we use at work, on the other hand will just prompt you. (And doesn't like taking credentials directly)
Kiro is of course really good to back into AWS stuff, it knows more about AWS than Amazon themselves!
Gemini is really good at understanding my inane ramble and mis-spelling
Well done lads
In any case, it's well known that devs in Google have liked anthropic/openai models for coding more than gemini, so unless they're hiding their best models from the people within, I think it's just the case that they're behind.
Even with anthropics record breaking revenue growth I don't see how the pure AI companies can sustain, but the catch-22 is that any obvious pivot proves that. This puts the more traditional tech companies in position to ride the back of the wave until the growth curve tops.
Google has gone all in on AI. To the point of challenging their own core product. Apple is waiting and seeing. Google is building and distributing, albeit with terrible marketing.
I don't think that's true, mostly in that a lot of usecases are solved via coding models + a harness.
> Google's models are driving cars right now.
Yes + other models like alphafold. But those are (relatively) specialized models. Besides, the comment I was responding to was saying Google is sandbagging the market to keep it calm or something. I don't disagree that Google is doing well overall and has some clear advantages
https://www.theverge.com/news/627849/auto-draft
But I believe since then Anthropic have raised more money, almost certainly diluting Google's stake (I could be wrong and misremembering that Google didn't partake in the additional fundraising). I have in the back of my head that Google is down to something like 10% now, but don't have time to go and find details to fact check that, sorry!
I'm actually impressed by how much the Hackernews crowd is sleeping on Google & Gemini. Yes, it's lagging behind in coding, but it's consistently much better and more reliable at literally everything else.
Also there was a period of time when Gemini was the best model out there...
I'm pretty sure they do. They already index metadata (you can see it in the web search results) so indexing the transcript is relatively easy.
It's actually incredibly useful if you just want to summarize a video, or my use case, want a text tutorial of something that's a video.
I have a boss who loves to rattle on for ages, and it gives a breakdown of what on earth he was on about
Google knows LLMs are the new UI, not the new IDE.
Not my impression. Lately I think Gemini is superior to ChatGPT and Claude in coding (I'm mostly using it with scientific stuff in Python).
cries in Google Glass
Wild that Meta has that product now decades later, which isn't even half of what Google offered.
And they have a massive amounts of TPUs. And yet... their models are way behind.
Auto Dubbing on the other hand is incredible, translating Russian/Ukranian speech with different voices and accents for each speaker, during a fire fight is wild.
How recently have you looked? I think nowadays it's quite good.
I'm still on Anthropic models to code but I'm on Gemini 3.5 Flash for everything else. How can you say Google is bad at LLM when their little flash model is literally SOTA on many benchmarks?
> ... yet OpenAI and Anthropic are eating their pie.
They're eating nobody's pie: it's a new pie. Google is a $4.5 trillion company, the 2nd biggest in the world as I type this.
Seen that fact and seen how good Gemini 3.5 Flash is, I'm not really sure Google is "bad at LLMs".
Doing a little bit of RAG on the transcript hardly sounds impressive.
I know GAAP accounting won't recognize any capital gain on these treasury operations, but from an economic standpoint this financial judo creates a lot of value for existing shareholders.
If i was a google cfo and was trading at a premium to my peers before that, i'd want to raise the cash now. Look at MSFT, they're trading at 25 forward p/e and were buying back shares at 40. If they have to issue equity over the next few years the spread between teh performance of the 2 cfos could be 40-50b on that alone.
Both parties get something they want this transaction. Alphabet gets the Berkshire halo effect and a guaranteed buyer of $10 billion worth of equities, Berkshire gets a large tranche of equity at a price they believe is fair.
I think they view Alphabet as their next Apple, and a relatively safe place to ride out whatever happens with AI: Alphabet is fairly well positioned for the upturn or the downturn, especially now with this expanded warchest of cash.
Even if AI crashes 90% SpaceX, OpenAI & Anthropic are worth say 200B each post IPO. In 10-20 years with similar effects to Internet they might be the next Meta. Apple, Microsoft of the world.
But Google will likely still be the leader if it can make good on it's advantages.
I don't know who's going to win the llm battle, but googles finance team has been doing their job fantastically.
Tech firms should always have a buffer and never get too close to the optimal debt ratio.
I think they have learned a lot re. what happens if you are asleep at the wheel now.
Yes. Their competition is deploying debt and Google has low leverage. They also have $100+ billion cash on their balance sheet.
> Tech firms should always have a buffer and never get too close to the optimal debt ratio
...why is this especially applicable to tech firms? (Or a tech firm like Google?)
This is an interesting change. Essentially just gives more timing control?
Not nitpicking your answer, I just don't understand.
The risk if it doesn't work out is that everyone gets diluted 1.67%
In this statement, their 2025 capex was $91.45B. They expect their 2026 capex to be $180B-190B. And they expect their "2027 capital expenditures to significantly increase compared to 2026."
So they simply don't have the money. Up until now, I thought the bubble talks about AI were silly because all these companies were using cash flow to fund their capex. These numbers are so astronomical now that a company that had $132B in net income has to take debt or issue stock to pay for it.
Capital raising is best done when markets are favorable, and Alphabet has the ability to choose how and when to raise.
Recall the froth of follow-on offerings hot circa 2000
So being down 1.7% is literally exactly what you'd expect.
But null hypothesis p=0.3 or something right?
In practice there's a lot of issues with asymmetric information. The company knows its own operations and financial position better than random traders on Wall Street. It is rational for it to buy back stock when the market value is lower than the true intrinsic value of the company, and to sell stock when the market value is higher than the true intrinsic value of the company. Therefore, traders often treat buybacks as a signal that the company is "cheap" (at least in the company's own view) and pump up the price accordingly, and treat stock issuances as a sign that company management believes that the stock is "expensive" and push it down accordingly. Company management has more inside information than market participants do, but is usually prohibited from trading on it. Stock issuances and stock buybacks are one of the few cases where insider-initiated trading is legal, because the benefits accrue to the company as a whole rather than a few individuals.
And in this specific case, selling shares to Berkshire at a 5% discount has a pretty clear signalling effect.
The company has less cash in the balance sheet, so its market cap decreases. But there are fewer shares, so the share price is the same.
(This allows hypothetical future growth to disproportionately benefit existing shareholders, but does not intrinsically increase stock price.)
In practice, like another poster pointed out, it signals the company’s belief that its own shares are undervalued, so the market usually increases its estimation of value.
price is more broad and brings in supply vs demand effects.
However, if someone gives you a dividend you typically have to pay tax, and lots of people really hate paying tax.
So buybacks are the preferred price neutral way of dealing with excess cash.
But before-paying-dividend versus after-paying-dividend decreases the value of a share.
It's not based on the fundamental value of the stock so maybe you wouldn't consider it "first order," but I think you can still call it "mechanical."
It's insightful to put such documents into Claude and see how they use many different financial mechanisms to raise the money. $15B sold directly to the big banks, $40B sold to the market (but also facilitated by these banks), a direct investment (PIPE) from Berkshire. Pretty cool how financial markets do these things.
Stock based comp is another $350B a year in US markets alone. So if you think about public markets as an avenue for companies to raise capital, post-IPO firms are doing it to the tune of more than half a trillion a year.
All these big tech firms are spending wildly to make sure they are the one on top at the end of it all. But whoever that ends up being there’s going to be one hell of a lot of fallout underneath them.
Why do you think there will only be one winner?
"Alphabet announced that its 2026 capital expenditures are expected to be $180-$190 billion, and that it expects 2027 capital expenditures to significantly increase [...] over the 12 months ended March 31, 2026, Alphabet generated $174 billion of operating cash flow"
Like how the early railroads or oil companies shook out and cost more than expected.
At least not yet.
There's not that much cash sitting around.
Something is gonna need to get sold to transfer into those assets.
Unless central banks are just going to print money to invest in these companies, I don't know who else is going to be able to take on enough debt to prevent massive sell offs somewhere for this.
It's not like ~$400B is pocket change...
(2) Middle east oil money (Saudi Aramco's profit every year is $100B+)
(3) Public traders have been and are looking to cycle out of other investments into higher growth areas.
It's easy as fuck for Google to raise this money because they are a money printing business. They are the most profitable company in the world, so for anyone this is basically the same as buying US debt.
Yes, but we are talking about liquidity not valuations...
At least part of this is slated for employee stock comp. Could be to keep their talent from running.
1. There’s real profit/value expected in pursuing the full automation of the labor market to the extent that the Board will approve large debts to known allies (BH) who only invest in long term infrastructure.
So they are investing in more AI infrastructure with long term capital because they see the payoff in the long term.
2. That also means they aren’t doing market moving plays in public like selling corporate debt because they don’t want to be in the short term froth with a long term bet.
They are considered a very low risk and can borrow for a long time at low rates. They recently issued a 100 year bond.
They seem to have decided to issue equity rather than borrow more. This is probably so that they can maintain the ability to borrow very cheaply in future if necessary.
Issuing new equity might be a financial engineering experiment. No other mag7 has tried it. Plus they got BH name on the plate.
So I guess Google doesn’t think their stock is particularly cheap, but Berkshire Hathaway wants to buy more anyway. (At a slight discount.)
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001652044/0...
I guess they don't want to burn it down to $40B?
High cap companies use debt for this: bank loan is located in the market where it's needed most, and the debt is serviced by interest earned from securities in other markets. The net taxes are a small percent (think 3%) relative to simply transferring funds within the company. Yes, this is the low effective tax rate the EU is quite upset about.
Other reasons for not touching their holdings usually have a similar explanation. The securities are fungible for accounting purposes but not fungible enough for actual day-to-day operations. Result: securities get "stranded" and the large company grows a hedge fund appendage.
Literally nobody.
Semiconductor/ Big Oil/ Rail/ Telco have.
I can invest perfectly in an always up market.
2008 wasn't a serious downturn?
The market thinks Alphabet is most able to efficiently turn $80B into more money by investing in AI infrastructure.
So, Alphabet is happy to oblige them, given the favorable terms.
Every company from megacorps to small fish are spending well in excess of profits on these capex expansions. No ROI timelines yet established....
Even if Alphabet has $80B sitting in the bank, they could quite reasonably arrive at a comparable decision.
More than a quadrillion high quality tokens per year. Pretty soon they will have an automated team of scientists doing basic and advanced research in every field. All those tokens will be fed back and make the model much more inference efficient.
… but as you say, idiots are lining up.
You’ll probably find this is extremely limited to whatever circle you find yourself in
People are going to line up for all of them. Hype sells these days.