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Comment by chatmasta | Hacker News Reader

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.

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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

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.

They already have shitloads corp debt. They don't want to over leverage.

Agreed! Any public debt is going to be chaotic the next few years most likely

No they don't lol. Their debt to equity ratio is 0.19. For reference Berkshire is 0.18 and Microsoft is 0.25

Capital is cheap how? Are you saying they think capital would get more expensive?

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.

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.

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.

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.)

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