The Oracle's Vote of Confidence: Why Berkshire's Alphabet Bet Cuts Against the Grain

Alphabet raises $25B in bonds, including first AUD issue, to fund $200B AI capex, yet stock lags 16% below highs amid investor caution.

There is a peculiar tension at the heart of Alphabet's current market narrative. The company is simultaneously pulling off one of the most successful debt placements of the year while watching its share price drift further from its highs. For investors trying to read the tea leaves, the signal is genuinely mixed — and that may be precisely the point.

A Debt Strategy That Speaks Volumes

The scale of Alphabet's recent borrowing is difficult to overstate. Just over two weeks ago, the company raised $25 billion in new bonds, with maturities stretching from 2028 all the way to 2066. The structure includes short-dated floating-rate notes alongside a $2.5 billion tranche paying 6.5 percent interest that doesn't mature for another four decades — a bet on AI's long-term value that few companies would have the confidence to make.

This week, the company added a further layer to that strategy with its first-ever Australian dollar bond issuance. The AUD 5.5 billion offering, split across three, five, ten, and twenty-year maturities, drew demand exceeding AUD 18 billion — more than triple what was placed. Reuters noted that Alphabet is the first AI hyperscaler to tap the Australian dollar bond market, a milestone that speaks to the depth of institutional confidence in the company's creditworthiness. ANZ, Deutsche Bank, RBC Capital Markets, and TD Securities led the consortium.

The rationale behind this borrowing spree is straightforward: CEO Sundar Pichai has lifted the full-year capital expenditure forecast to between $195 billion and $205 billion — more than double the $91 billion that sufficed in 2025. Data centers, TPU chips, and Gemini infrastructure do not come cheap, and even a company sitting on tens of billions in cash has decided that external capital makes sense at these levels.

The Numbers Tell Two Stories

The operational picture, on the surface, looks strong. Second-quarter 2026 revenue grew 24.2 percent to $119.80 billion, while earnings per share of $9.11 comfortably beat analyst expectations. The company's cloud division is beginning to monetize its Tensor Processing Units directly, and a deepened chip partnership with Marvell Technology should help refinance the heavy investment cycle over time.

Yet the share price tells a more cautious tale. Alphabet stock sits roughly 16 percent below its 52-week high of €350.75, trading at €295.60 — beneath its 50-day moving average of €306.78. The relative strength index of 44.5 suggests neutral-to-soft momentum rather than any kind of euphoria. This disconnect between operational delivery and market skepticism is the defining feature of the current AI investment cycle: companies building tomorrow's infrastructure must pay today's bills, and investors are increasingly focused on the bill.

Diverging Bets Among the Smart Money

What makes this moment particularly fascinating is how differently major investors are positioning themselves. Berkshire Hathaway increased its Alphabet stake by 83 percent in the second quarter, according to regulatory filings, bringing its holdings to nearly 106 million shares valued at approximately $37.8 billion as of June 30. That makes Alphabet Berkshire's third-largest position. Reuters linked the accumulation to the $10 billion investment in AI infrastructure announced in June.

The picture is more nuanced than a simple vote of confidence, however. Tiger Global Management trimmed its position by 45.4 percent over the same period. Bill Ackman's Pershing Square exited its remaining Alphabet stake entirely, reallocating capital to Microsoft and Netflix — though Ackman himself stressed he remains "very bullish" on Alphabet long-term, framing the sale as a portfolio decision rather than a verdict on the business model.

Regulatory Headwinds Multiply

While the capital markets have been receptive, the regulatory environment grows increasingly complicated. Australia passed legislation on Thursday that could impose a 2.5 percent levy on Google's advertising revenue if the company fails to reach commercial agreements with local news publishers — a familiar pattern in jurisdictions seeking to extract payment for news content.

France's press association is pursuing a related angle, asking the competition authority to examine whether Google's AI-generated article summaries are siphoning readers away from publishers. Meanwhile, the bankruptcy judge in the Spirit Airlines case postponed a hearing on Google's proposed $10 million purchase of the airline's internal business data — from employee emails to marketing materials — to September 9, following objections from the flight attendants' union. The data was intended for product development and AI training, but the pushback illustrates a growing resistance to Alphabet's data ambitions.

Product Momentum Continues

On the technology front, the company shows no signs of slowing. Gemini 3.7 Flash launched on August 13, bringing new coding and automated business process capabilities to more than 160 countries via Gemini Spark. The AI leadership structure has been reshuffled, with parts of DeepMind moving into Google's core organization, Demis Hassabis transitioning to a chairman role, and Koray Kavukcuoglu taking final decision-making authority on central DeepMind matters. Co-founder Sergey Brin has reportedly urged employees to go all-in on Gemini.

Consumer hardware has also seen fresh activity, with the Pixel 11 series, Pixel Watch 5, and an enhanced Gboard featuring Gemini Intelligence. Amazon and AT&T are already offering trade-in credits of up to $1,350 on the new devices — a sign that retailers expect meaningful demand.

The Quarter Ahead

The company's next fixed point on the calendar is September 4, when the stock goes ex-dividend for its quarterly payout of $0.22, with payment due September 14. It is a modest but reliable marker in a story otherwise dominated by outsized numbers.

The central question hanging over Alphabet is whether a company that borrows billions to build ever more computing capacity can win back investor confidence faster than its cost of capital rises. The TPU monetization push and cloud growth will need to carry significant weight in the coming quarters. With Berkshire's backing on one side and regulatory friction on the other, the coming months will test whether the market's skepticism or the company's confidence proves better calibrated.