Alphabet to Raise about $15 Billion from US Bond Sale
Google parent Alphabet, in its annual financial report last week, highlighted the potential impact of artificial intelligence on its advertising operations and observed that significant investments in this area might result in the company having some "excess capacity," according to reports.
CEO Sundar Pichai also informed stakeholders that “compute capacity” was a concern for executives. “Power, land, supply chain limitations, how do you scale up to satisfy this unprecedented demand for this time?” he said.
“In order to satisfy the computing capacity requirements for AI training and inference, alongside standard cloud computing services, we are establishing substantial leasing agreements with external operators, potentially raising expenses and operational intricacies. Significant commercial contracts might also elevate liabilities and responsibilities if there is non-performance by us, our counterparts, or vendors,” Alphabet stated in the submission to the United States Securities and Exchange Commission (US SEC).
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There are worries that Google's AI product (Gemini AI) could undermine Search and affect its advertising revenue as fewer individuals utilize the tool. The CNBC report noted that this was also recognized in the filing. We and our rivals are continually adapting to address this change and offer innovative and evolving advertising formats. "There is no guarantee that we will successfully and competitively adjust to this change, nor that these advertising formats, strategies, and offerings will prove effective," it noted.
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Google's Q4 advertising revenue rose by 13.5% compared to the previous year, reaching $82.28 billion, indicating it has largely avoided the major effects thus far.
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Notably, the tech giant raised $20 billion in its biggest-ever US dollar bond sale on 9 February, as it seeks to fund AI-related ambitions.
Alphabet is borrowing “far and wide” to finance its sprawling AI ambitions. The company originally intended to raise $15 billion but raised $20 billion in its biggest-ever US dollar bond sale