The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Robert Cyran

NEW YORK, June 2 (Reuters Breakingviews) - Give a dog treats consistently and soon the pet will be trained. The same can be said of investors and AI. They have reliably rewarded Alphabet GOOGL.O for spending large sums of money to build data centers. It's no wonder the tech giant is back for $80 billion more.

Alphabet shares have strongly outperformed the market over the past five years, with a total return of more than 200%. It sends a clear signal: keep it up.

Google's owner has been plowing cash into gigantic facilities stockpiled with the servers, data storage and networking equipment needed to train and develop its Gemini large-language models. The company processed 16 billion tokens, the base unit of AI generation, per minute last quarter, a figure that is rising rapidly.

Boss Sundar Pichai plans to invest as much as $190 billion this year alone, eight times more than Alphabet did in 2021, before OpenAI kickstarted the latest boom by releasing ChatGPT. He also has vowed to boost spending again in 2027. While the company can afford the spree, it's chewing up most of the company’s free cash flow generated from advertising revenue.

There's $45 billion of net cash sitting on the balance sheet and Alphabet could easily borrow additional funds after issuing more than $30 billion of debt earlier this year. Its estimated free cash flow yield, or how much is thrown off for shareholders, is now less than 1%, however. Investment grade bonds yield more, so selling equity makes sense.

Raising $80 billion of equity is a tall order, even for a $4 trillion company. Berkshire Hathaway BRKa.N, which is overflowing with cash and already backs Alphabet, agreed to buy another $10 billion of shares at a small discount. Additional underwritten equity, convertible preferred and at-the-money stock sales are either lined up or in the works.

Rivals have been similarly rewarded. SpaceX, OpenAI and Anthropic are all preparing to sell stock in market debuts, commanding valuations that will probably exceed $1 trillion. The amounts raised will be hefty. Anthropic secured $65 billion last week, and presumably intends to ask public shareholders for even more. There doesn't seem to be any shortage of capital treats now, but a smart dog will grab all it can now before supplies start to run out.

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CONTEXT NEWS

Alphabet said on June 1 it plans to raise as much as $80 billion in what would be a record U.S. secondary offering of equity.

The owner of Google and YouTube will issue $10 billion in stock to Berkshire Hathaway in a private placement. Those shares, equally divided between Class A and Class C, are priced at about a 6% discount to the closing stock price on June 1.

Another $15 billion of mandatory convertible preferred stock, and $15 billion of Class A and C shares are being sold in an underwritten offering. Starting in the third quarter, Alphabet intends to issue up to $40 billion more of Class A and C shares at the money, or ATM.

Approximately $30 billion of the ATM offering will be used to cover tax obligations associated with the vesting of employee equity awards. Remaining proceeds will be used for corporate purposes, including capital expenditure for AI infrastructure.

Goldman Sachs, JPMorgan and Morgan Stanley are the underwriters.