Like everyone else, I’m staring at a very red portfolio today. I’ll probably buy more and ride it out, but while sitting on the toilet “digesting” today’s market action (and apparently following the market’s lead by taking a massive dump), I had a thought..
Did Google just reset the AI stampede?
Alphabet’s massive $85 billion equity raise to fund AI infrastructure may have changed the narrative. For years, people assumed the megacap AI companies could mostly pay for all this AI spending with cash flow and buybacks. Now Google has basically shown that even the biggest players might need to sell significant stock to keep up in the AI race.
Then today we got reports that Meta is looking at a potentially huge equity raise too to help pay for AI spending. Meta hasn’t confirmed anything, but the rumor alone hit the stock pretty hard.
So here’s my question..
Is today’s selloff less about AI demand slowing and more about investors suddenly realizing that AI spending may mean large ongoing shareholder dilution?
If Google can issue stock, and Meta is thinking about it, what’s stopping Microsoft, Amazon, or everyone else doing the same? Truly why wouldn’t they do it as soon as possible too.
I feel like the markets may be pricing in a future where the AI winners still win, but existing shareholders end up owning a smaller piece of the pie.
What do you all make of it?
Are investors overreacting, did Google just change the conversation, or am I just straining too hard on the toilet right now.