Alphabet’s Funding Ambition: $80 Billion for AI

0:00Alphabet, the owner of Google, is trying to raise$80 billion in a stock sale. 10 billion of that is going to come from Berkshire, which is pretty crazy. And all of this is to fund their AI build out. At the same time, Trump is signing a narrower AI executive order. He got a lot of pushback from the AI industry and has adjusted. I'll talk about the pros and cons of that. GitHub's co-pilot's new usage-based pricing is burning through people's entire monthly budgets in a single day. Opal is pivoting to AI hardware. They received$40 million from OpenAI. They're now valued at$275 million. And Uber is capping their employees' AI spending at$1 ,500 per tool after they burnt through the entire annual budget in under four months.

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1:20So if you want to get everything that's happening with AI, go check out AIChatDaily.com slash newsletter. there's a link in the description or it's the big subscribe button on the top right hand corner of AI chat daily.com. The first story is that alphabet is raising$80 billion through stock sales. This 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.

1:52And 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 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.

2:29This 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, you know, all of these AI buildouts that they're trying to do. So Berkshire's$10 billion vote of confidence, I think, is a pretty important thing.

3:05If it's just if nothing other than like a signal, they're like, look, like they make smart investments, they believe Google is gonna be able to pay it back. I think you can expect Microsoft meta and Amazon to follow in their own kind of mega raises. It's interesting, we're all used to seeing Anthropic and OpenAI do these huge raises. But it's like Google's having to go and get more money too, because it's just so expensive, but it's incredibly valuable to build these out, right? We see even XAI and SpaceX, right? With their massive data center build out that they used for training Grok, they could go and turn around even if the usage wasn't insane, they turn around and they can sell that back to Anthropik for$1.5 billion a month.

3:38So there's a lot of money to be made in these data centers and in buying all of these chips. Okay, Trump is signing an executive order today where he's asking AI companies to voluntarily submit their frontier your 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.

4:07But 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 there's a con, they're like, oh, look, Silicon Valley is pushing around the government telling them what to do.

4:34Or you could say, maybe the government is listening to the people who have expertise in this area. There's, 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.

5:05So it is locking in this kind of voluntary compliance only for now, which I think is great. Trump also delayed signing a much stricter version in May. Venture capitalist David Sachs and a bunch of other figures inside of the industry were lobbying against this kind of longer review window, the 90 days, like I mentioned. The order directs the Department of Justice to treat AI-assisted hacking as a high-priority enforcement area, and it also gives prosecutors a lot clearer mandates to pursue model-assisted intrusion. So there's a lot going on in here. I'm happy that the government is looking at this and I'm happy they're not being too heavy handed on the regulation like we've seen with, you know, the EU and how that stifled a lot of AI innovation coming out of the EU.

5:48All right, GitHub Copilot is getting a massive backlash. So they switched their pricing yesterday and they started to charge 0.01 per credit, like 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 1 ,500 credits. One user burned 840 credits in one day. Another user said they used 8 ,000 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.

6:26I 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 tokens super quick. If you want to upgrade, you just got to pay for it all.

6:53So I think right now we're going to see probably a future when OpenAI and Anthropic have IPO'd and they're public companies, they're under a little bit more scrutiny. They're not gonna 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 gonna 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.

7:24So 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. I know a lot of people, they like to roast me on LinkedIn for having two Claude Max subscriptions. I am getting so much stuff done.

7:53Today, 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 so, 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.

8:28So I'm seeing so much value, but I think that we're going to come to a point in the near future where all this stuff actually gets more expensive for a while as these subsidized programs are ending just like GitHub has ended theirs. 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're 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.

9:07We've seen a lot of flops that don't seem like they've really made it. And 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 going to come to a place where some tools are not, some hardware isn't a good fit for AI, while other hardware is. And we know that OpenAI is 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 OpenAI is Opal's largest shareholder, but they hold zero rights to the company's intellectual property or product design.

9:43and 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, you know, stakeholder in this company. But what's interesting is if this product flops from Opal, like we've seen with friend.com, Humane and Rabbit, it's not going to tarnish OpenAI's brand.

10:25It's not like it was a loss for them. They're just like, oh, yeah, there's, you know, just someone we partnered with and they were going to roll us out. But if it does work, it's proof for them that, look, AI hardware can be sticky. And this new product we're coming out with, Johnny Ive, it could be a success. So an interesting play from OpenAI. 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 Max subscription, that's$200 a month, it's very easy to burn through an insane amount of money.

11:04I ran out of my Claude Max 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, see how long it lasts me. I've spent the$200 in one day. So 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, 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.

11:40I think that's insanely subsidized. And I recommend, like I already mentioned, everybody get access to that. And that's it for the podcast. Thank you so much for tuning in guys. If you want to try my startup and get access to over 80 different AI models in one place for eight 99 a month, go check out AI box.ai. You can chat with 80 different AI models, video, audio image, and you get access to everything in one platform. You don't have to log into a bunch of different places, share your credit cards with a bunch of different platforms. Remember your passwords, one place, all of your data, all of your info in one platform, AI box.ai.

12:09I'll leave a link in the description.