Funding the Future: Alphabet's $80 Billion Goal  🔗 **Source:** [Funding the Future: Alphabet's $80 Billion Goal](https://share.snipd.com/episode/f9bfe08d-ab2f-4135-b7b6-4a22be54a157) ## Highlights - **Hyperscalers Can't Self Fund AI Buildouts** - Alphabet needs external capital because hyperscaler AI infrastructure spending (across Google, Microsoft, Meta, Amazon) is exploding into the tens of billions and outpacing operating cash flow. - Jaeden Schafer notes Alphabet's $80B raise includes $10B from Berkshire and signals hyperscalers can't self-fund large AI buildouts. Transcript: Jaeden Schafer The first story is that Alphabet is raising $80 billion through stock sales. The big anchor on this whole sale is that they're getting $10 billion from Berkshire Hathaway. More on that in a second. What's going on right now is that the AI infrastructure spending of Google and, you know, Alphabet, the owner of Google has absolutely exploded to 80 to 190 billion dollars this year. And the problem is that that's actually outpacing their operating cash flow. So it's basically forcing them to tap into equity and debt markets as the entire hyperscaler cohort, all of the other competitors like Amazon and Microsoft and everyone else are all Collectively moving towards $1 trillion in AI spending by 2027, which is wild. This raise in particular includes about $30 billion in underwritten offerings, $15 billion in mandatory convertible preferred stock and a $40 billion at the market program launching In Q3. So Berkshire Hathaway's position has, you know, they're putting in $10 billion now, but their position has been growing. This isn't like a new thing for them. They only had about $4.3 billion in November, and they're up to almost $20 billion now. This is one of Berkshire's largest tech holdings after Apple. Alphabet, Microsoft, Meta, Amazon combined, they're all tracking towards the $700 billion in CapEx this year. And I think Wall Street is saying that there's going to be about a trillion dollars, like I mentioned, by 2027. Alphabet just admitted basically that Wall Street already knows something. The hyperscalers can't self-fund all of these AI buildouts that they're trying to do. ([Time 0:01:30](https://share.snipd.com/snip/0026f667-1c92-4706-ac80-de3d75ae6130)) - **U.S. Executive Order Favors Voluntary Speed** - The U.S. executive order makes model submission voluntary and shortens review to 30 days, prioritizing speed and competitiveness with China. - Jaeden Schafer highlights the order forbids mandatory federal licensing and reflects industry pushback that reduced a proposed 90-day window. Transcript: Jaeden Schafer Okay, Trump is signing an executive order today where he's asking AI companies to voluntarily submit their frontier models 30 days before they release them. Originally, it was 90 days, which I'm going to be honest, three months ahead of time, I think is too much if you're trying to be competitive. We're trying to be competitive with China and a lot of other countries. If all of our models were going to get held back, you know, 90 days for the government, which I don't even think is that great at monitoring everything. But I guess you have to have some sort of regulatory body, perhaps, right, like the Federal Aviation Administration for airplanes. Maybe we need that for AI. I don't really like regulation, but perhaps it's needed. Anyways, I'm happy to move it down from 90 to 30 days. And it's also voluntary, right? So it's not like they're being forced. Now, the reason why they've made a bunch of these adjustments, Silicon Valley pushed back, which I think some people will say this is a pro, some people will say this is a con, they're Like, Oh, look, Silicon Valley is pushing around the government telling them what to do. Or you could say, maybe the government is listening to the people who have expertise in this area. There is, you know, two sides of the coin. I think right now, this is showing that the federal oversight is basically voluntary. So there's no mandatory licensing regime. But we do have some sort of framework in place. And I think they're just right now trying to prioritize speed. They're doing some safety checks, but we're really trying to compete with China at this point. A couple other interesting things in this executive order, it explicitly forbids creating a mandatory federal licensing or preclearance for AI models. So it is locking in this kind of voluntary compliance only for now, which I think is great. ([Time 0:03:42](https://share.snipd.com/snip/8088cef4-e8ea-4d61-8110-ddbc323f2f23)) - **Prefer Fixed Subscriptions To Avoid Token Shock** - Expect subsidized token plans to end and budget accordingly by preferring fixed subscriptions over pay-as-you-go API use. - Jaeden Schafer points to GitHub Copilot's new per-credit pricing that burned users' monthly budgets in hours as a warning. Transcript: Jaeden Schafer So basically one penny per credit and users have reported that they are using their entire monthly allotment in a single hour or a single day. If you're on the $10 a month pro plan, that now includes only 1500 credits, one user burned 840 credits in one day, another user said they use 8000 monthly credits in 24 hours. The thing that I'm going to be honest here is we have Anthropic and a lot of other players heavily subsidizing their token usage. I think Google and OpenAI are also subsidizing it, but Anthropic most definitely is on the Claude Max plan. If you're going to pay the $200 a month, they are subsidizing those credits. And what's interesting is we have GitHub is kind of the first shoe to drop in my opinion. Microsoft owns GitHub, so they should have, you know, technically unlimited money and they should really just be trying to get everyone to use their product. But instead, they're saying, look, guys, you got to pay for it. And you're going to burn through your token super quick. If you want to upgrade, you just got to pay for it all. So I think right now we're going to see a probably a future when OpenAI and Anthropic have IPO and their public companies, they're under a little bit more scrutiny, they're not going To be able to just give away all of these free handouts. Now, maybe we can make models cheaper in the future, right? Like maybe we can optimize them and maybe data centers, we have more of them, we can make things cheaper, but data centers take years to build. So I don't think that's going to be our instant solution. Model optimization, I have a lot of hope there. But if I'm being honest, my prediction for the future is that we are going to see in the next year, a lot of these subsidized programs end. ([Time 0:06:00](https://share.snipd.com/snip/a99063f9-f0a6-426e-a393-2b2d4f6935d6)) - **Build Now While Subsidies Last** - Take advantage of heavily subsidized model access now by building while credits and high-tier plans remain inexpensive. - Jaeden Schafer recommends buying a Claude Max $200/month subscription and says he purchased two to ship apps and upgrade existing businesses fast. Transcript: Jaeden Schafer To just give away all of these free handouts. Now, maybe we can make models cheaper in the future, right? Like maybe we can optimize them and maybe data centers, we have more of them, we can make things cheaper, but data centers take years to build. So I don't think that's going to be our instant solution. Model optimization, I have a lot of hope there. But if I'm being honest, my prediction for the future is that we are going to see in the next year, a lot of these subsidized programs end. So what is my recommendation to everyone? And by the way, I could be completely wrong about this. My recommendation is to get a Claude Max subscription for $200 a month if you want to build something and build it today. Build stuff as soon as you can while you can take advantage of a lot of these subsidized programs. I'm putting my money where my mouth is. Personally, I yesterday just purchased my second Claude Max subscription. So I actually have two that I'm running now. And a lot of people, they like to roast me on LinkedIn for having two CloudMax subscriptions. I am getting so much stuff done today. I pushed two different apps to the App Store for review. I'll let you know when they are live. I'm really proud of them. Some of them are businesses that have been making me money for years, and I've been able to completely upgrade them in a way that I never was able to before. So there's a lot of exciting stuff that I'm doing. I've been able to build websites and SaaS. If you go to AIChatDaily.com, which is kind of the news website that's associated with this, I vibe-coded that entire thing using Cloud Code. I'm really impressed with it. And by the way, the metrics on it, I'll probably cover them in the next episode, but they are exploding as far as users and all sorts of cool stuff there. ([Time 0:07:02](https://share.snipd.com/snip/3c8b420d-cc08-40df-8e85-0fab7e16d6dd)) - **OpenAI Hedging On AI Hardware With Opal** - OpenAI's $40M investment in Opal signals a hedge on consumer AI hardware: test partner devices can fail without harming OpenAI's brand while informing its own hardware plans. - Jaeden Schafer notes Opal halted shipments and OpenAI holds large stake but no IP rights, letting both experiment safely. Transcript: Jaeden Schafer Okay. Opal is pivoting. It's a webcam startup, by the way, if you didn't know them, but they're rebranding as Opal Electronics and they pivoting to AI hardware. They just raised $40 million from OpenAI in Q1 last year, which basically valued them at $275 million. OpenAI, I think, is betting that there's going to be some physical AI devices. Now, we've seen a lot of flops with the humane pin with the rabbit R1 with I think even the friend.com pendant. We saw we've seen a lot of flops that don't seem like they've really made it. And is is that kind of the future of AI hardware? Absolutely not, in my opinion, because we've also seen some big wins. The meta Ray-Bans are incredibly popular. I see so many people using those. And so I think we're gonna come to a place where some some tools are not some hardware isn't a good fit for AI, while other hardware is and we know that opening eyes working on a lot of hardware That is unannounced with Johnny Ive, the former designer of Apple, the iPhone. And so there's going to be some interesting things. Now, I think opening eye is Opal's largest shareholder, but they hold zero rights to the company's intellectual property or product design. And Opal has also stopped any sort of product shipments for three years after they had a 2022 meeting with Sam Altman's team about integrating ChatGPT into hardware. I think this is a smart play from OpenAI. Basically, it's a hedge, in my opinion, on their hardware goals that they're doing with Johnny Ive. Between Opal and Johnny Ive, they can see which of these kind of hardware devices stick. It's also interesting because it's not a straight up buyout, but I mean, basically it feels like a buyout, right? They put $40 million in. They're the biggest stakeholder in this company. ([Time 0:08:40](https://share.snipd.com/snip/1c2b5018-3e19-45b0-9973-c6c79b0ccfec)) - **Company Budgets Blow Up From Uncontrolled API Use** - Uber capped employee AI spending at $1,500 per tool after exhausting its annual budget in four months. - Jaeden Schafer recounts his own experience burning through a $200 Claude Max token overage in a single day to show how quickly costs escalate. Transcript: Jaeden Schafer Uber is currently capping their AI employee spending at $1,500 per tool because they burnt through their entire annual budget in four months. I mean, this is kind of the same problem that I was talking about with GitHub. There is an issue where if you just give all of your employees at a company API access to Claude, for example, and not the Claude Mac subscription, that's $200 a month, it's very easy to Burn through an insane amount of money. You know, I run out of my Claude Mac subscription, which happened to me like a week ago. I was like, okay, fine. I'll just buy some extra tokens because you can buy like overage tokens. So I was like, I'll just spend 200 bucks, see how long it lasts me. I've spent the $200 in one day. So I spent, I'm happy to spend $200 a month because the token cost for me would be that much every single day times 30 days, which is $6,000. And that was also I this was actually maybe this was a few weeks ago. This was before they said they doubled the usage and the token limits because they made the SpaceX deal. So somewhere between six and $12,000. I am really happy for the $200 a month. I think that's insanely subsidized. And I recommend like I already mentioned, everybody get access to that. ([Time 0:10:39](https://share.snipd.com/snip/f4f0b54b-7edb-43c3-b875-43d513a5208b))