{"id":431325,"date":"2026-06-02T20:00:09","date_gmt":"2026-06-02T13:00:09","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/2026\/06\/first-they-came-for-the-free-cash-flow-then-the-came-for-the-equity\/"},"modified":"2026-06-02T20:00:09","modified_gmt":"2026-06-02T13:00:09","slug":"first-they-came-for-the-free-cash-flow-then-the-came-for-the-equity","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/2026\/06\/first-they-came-for-the-free-cash-flow-then-the-came-for-the-equity\/","title":{"rendered":"First they came for the free cash flow, then the came for the equity"},"content":{"rendered":"<div>\n<p>Shares of Alphabet are down 2.9% after the company announced it&#8217;s diluting existing shareholders by 1.7% via an $80 billion equity raise.<\/p>\n<p>To me, this marks a new chapter in the AI arms race and is the strongest sign yet that it&#8217;s an arms race of the likes never seen before in corporate history. <\/p>\n<p>Just over a year ago, the hyperscalers were gushing free cash flow and in the past year, they&#8217;ve flipped to spending it all on buying chips, competing for talent and building data centers. Once that well ran dry, they began to issue debt, tainting the once-pristine balance sheets of the biggest companies in the world.<\/p>\n<p>In the previous year, Google had raised $85 billion in debt, including a 100-year bond. The problem, is that with the war in Iran, the market was increasingly looking for higher yields on debt.<\/p>\n<p>Now Alphabet is going down the stack and tapping equity, a watershed move that includes:<\/p>\n<ul>\n<li>$10 billion sold directly to Berkshire Hathaway in a private placement<\/li>\n<li>Approximately $30 billion in public offerings<\/li>\n<li>Up to $40 billion through an at-the-market (ATM) issuance program during the second half of 2026<\/li>\n<\/ul>\n<p>The latter means that if you&#8217;re buying shares in H2, they could be directly from the company rather than another shareholder. It&#8217;s also another dollar of competition for equity markets that is going to get increasingly crowded with IPOs upcoming from SpaceX, Anthropic and OpenAI.<\/p>\n<p>The fear now is that equity raises are going to come from the others in the AI race, or the companies scrambling to supply them. <\/p>\n<p>The problem, is that eventually this needs to make money. If you&#8217;re selling shares &#8212; including to Berkshire Hathaway &#8212; at $261, then those buyers need to expect a positive return. Berkshire is an impressive stamp of approval and Google has many incredible business lines and products.<\/p>\n<p>The problem right now is the one that Sam Altman highlighted yesterday: <\/p>\n<blockquote><p>&#8220;I know some great stuff is happening but there is also a tonne of<br \/>\nwaste. How long do I have to wait for it to show up in revenue? How long<br \/>\n do I have to wait to really get costs under control? I assume<br \/>\nthe industry will figure that out pretty quickly but that is a fair<br \/>\nissue&#8230; I would bet that by a year or two from now<br \/>\nthere is a much better rationalization of company spend relative to<br \/>\noutcomes.&#8221;<\/p><\/blockquote>\n<p>What he&#8217;s saying is that companies are spending huge amounts of cash on AI projects that won&#8217;t make a return. That&#8217;s the kind of thing that becomes endemic in a mania (like the one we&#8217;re in) and leads to a bubble.<\/p>\n<p>                            This article was written by Adam Button at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Shares of Alphabet are down 2.9% after the company announced it&#8217;s diluting existing shareholders by 1.7% via an $80 billion equity raise. To me, this marks a new chapter in the AI&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-431325","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/431325","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=431325"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/431325\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=431325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=431325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=431325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}