Introduction: Alphabet to Raise $80bn for AI Investments
Good morning, and welcome to our ongoing coverage of business, financial markets, and the global economy.
The economics of the AI boom are once again in focus following Google’s parent company, Alphabet, announcing plans to raise up to $80 billion in equity to partly finance its extensive AI infrastructure investments.
This fundraising is among the largest equity raises ever recorded and includes a $10 billion share sale to investment giant Berkshire Hathaway.
Alphabet, whose Gemini AI system is expanding its share in the AI chatbot market, stated that the funds will be used to enhance its "world-class AI compute infrastructure to meet unprecedented customer demand."
AI is fueling an expansionary phase for Alphabet, with strong demand for its AI solutions and services from both enterprises and consumers surpassing the company’s current supply. By increasing its investments, Alphabet aims to scale its foundational infrastructure to support significant growth opportunities ahead.
However, the magnitude of this fundraising also signals to markets that despite billions invested in AI infrastructure, meaningful returns remain limited.
Jim Reid, market strategist at Deutsche Bank, told clients that Alphabet is reminding investors of the "unprecedented scale of the AI spending boom," adding:
“Funding of the AI capex boom is becoming an increasingly key topic for markets.”
The decision to involve Berkshire Hathaway is notable. Under the leadership of the now-retired Warren Buffett, Berkshire often provided crucial and lucrative funding to companies in need of capital.
Alphabet explained that half of the $80 billion will be allocated to "scale AI infrastructure and global compute," while $40 billion is designated to cover "an administrative change to how it meets tax obligations associated with vesting of employee equity awards."
Alphabet is also raising funds ahead of some of its largest AI competitors entering the stock market.
Yesterday, Anthropic, the maker of the Claude chatbot, filed confidentially for an initial public offering (IPO) on the US stock market.
Anthropic is now valued at $965 billion after raising $65 billion in funding, surpassing OpenAI to become the world’s most valuable startup.
The Agenda
- 9.30am BST: Bank of England mortgage approvals and consumer credit data
- 9.45am BST: Treasury Committee session on student loans
- 10am BST: Eurozone inflation report for May
- 3pm BST: US JOLTS vacancies report
- 3pm BST: Bank of England governor Andrew Bailey: Oral evidence to the Lords Economic Affairs Committee
British Land Appoints Joanne McNamara as CEO
British Land, one of the UK’s largest property developers, has named Joanne McNamara as its new chief executive. McNamara is a senior executive from the real estate division of a Canadian pension fund.
She will succeed Simon Carter, who served over five years as CEO of British Land and 18 years with the company. Carter is moving to lead P3 Logistics Parks, a European warehouse investor, manager, and developer owned by Singapore’s sovereign wealth fund GIC.
McNamara currently manages the European business at Oxford Properties, a global real estate investor, developer, and manager owned by the Ontario Municipal Employees Retirement System, one of Canada’s largest pension funds.
She will be among a small number of female CEOs at FTSE 100 companies and is a rare female leader in the male-dominated real estate sector.
With over 20 years of real estate experience, McNamara joined Oxford Properties in 2010 as one of its first London team members. There, she built a European team of more than 70 and managed a portfolio of offices, retail, housing, and warehouses valued at £8 billion. Previously, she worked at developer Hammerson and investment group DTZ.
She is expected to join British Land by the end of November after completing her notice period.
“Joanne is one of Europe’s most respected real estate professionals,” said William Rucker, chair of British Land. “With her deep expertise of real estate, valuable experience in the world of private capital and a strong reputation for decisive leadership, she is exceptionally well placed to drive the business forward.”
“British Land is a business that I have always admired, with an impressive track record of delivering and managing best in class places across the UK and an expert team at its helm.”
British Land and Oxford Properties collaborated to develop the Leadenhall Building in the City, known as the Cheesegrater, which opened in July 2014.
Iran’s Inflation Hits Record High in May
Iran’s year-on-year inflation reached a record high in May, the worst since World War II, according to Associated Press reports.
The Iranian consumer price index rose 77.2% compared to the previous year.
Inflation in essential daily goods and services such as medicine, taxi fares, tobacco, and communication fees increased by 113.8% year-on-year.
Oil Price Drops on Middle East Peace Hopes
The AI boom is one of two key issues currently influencing markets. The other is the Middle East conflict, where investors are watching for progress in US-Iran peace talks.
Today, oil prices fell by approximately 1% after former US President Donald Trump announced an agreement to de-escalate fighting in Lebanon.
Trump stated that Hezbollah, via intermediaries, pledged not to attack Israel, while Israeli Prime Minister Benjamin Netanyahu agreed to withdraw troops preparing to attack Beirut.
This development helped push Brent crude down to $93.90 a barrel, following a recent price surge amid deteriorating relations between Tehran and Washington DC.
Stock markets also showed modest gains, with the FTSE 100 index rising by 0.3%.
“Oil down, markets up – these are welcome movements for investors after three months of uncertainty around the Iran war,” said Russ Mould, investment director at AJ Bell, adding:
“Brent crude fell 1.1% to $93.90 after Israel halted strikes on Lebanon, raising hopes that a peace deal is still plausible.
The further the oil price retreats from the $100 per barrel level, the greater investors’ risk appetite. This explains why miners and consumer cyclical stocks led the charge on the FTSE 100. Defensive-style sectors including healthcare and utilities didn’t fare as well as there was classic portfolio rotation.”
Nvidia’s Jensen Huang Praises Marvell as Next Trillion-Dollar Company
Shares in semiconductor firm Marvell Technology surged 25% in premarket trading after Nvidia CEO Jensen Huang described the chipmaker as the next “trillion-dollar company.”
Huang made these remarks at the Computex trade show in Taipei, appearing alongside Marvell CEO Matt Murphy.
Huang explained that Marvell’s networking and connectivity chips are vital to data centers, distributing computing tasks across thousands of connected chips, stating:
“When you take a computing problem, and you disaggregate it into a lot of parts, and you distribute it across the entire data center, what’s necessary is connectivity.
That’s the reason why Matt’s doing so well. That’s the reason why Marvell is so essential.”
Before Huang’s comments, Marvell was valued at nearly $192 billion.
Last week, chipmakers SK Hynix and Micron surpassed the $1 trillion valuation mark for the first time.
Hargreaves Lansdown: Alphabet’s AI Share Sale Surpasses Previous Fundraises
Alphabet’s planned $80 billion equity raise appears to be the largest ever, according to Nicholas Hyett, lead alternatives analyst at Hargreaves Lansdown.
Hyett noted that this stock sale exceeds previous secondary share sales and surpasses the largest initial public offerings (IPOs) in size.
“Alphabet’s $80bn fundraise dwarfs the world’s largest IPOs, often the moment of maximum excitement when companies seek to fill their financial war chests. In fact, if successful, it would raise more than the world’s three largest initial public offerings put together - Saudi Aramco raised $25.6bn when it debuted on the Saudi exchange in 2019; Alibaba raised $21.8bn on NYSE in 2014, and SoftBank raised $21.3bn when it listed in Tokyo in 2018.
We can’t think of a secondary issue that would even come close to matching the ambition of this fundraise - $80bn would be enough to buy the 137th member of the S&P 500 outright, and there just aren’t many companies in the world that have the ability to spend that amount of money productively.”
Wessex Water has announced the retirement of its chief financial officer, Andy Pymer, marking the latest leadership change at the utility owned by Malaysian group YTL.
Pymer will be succeeded later this year by Richard Eadie, executive finance director at Anglian Water Services. Eadie will report to Ruth Jefferson, who replaced long-serving chief executive Colin Skellett in October 2024.
Pymer served as CFO from 2020 during a turbulent period for the water industry.
reported previously undisclosed payments totaling £50,000 made to Pymer and another executive by other companies in the YTL Group during the same year the company was under scrutiny, although Wessex denied these were bonuses. Pymer’s pay for the last financial year was £249,000.
’s reporting prompted criticism. Junior environment minister Emma Hardy stated that the situation “baffles me.”
“If performance is not good enough, people should not get a bonus.”
Ruth Jefferson, Wessex’s CEO, said Pymer “has made an outstanding contribution to Wessex Water over more than three decades, and it has been a great pleasure to work alongside him.”
Gold Surpasses US Treasuries as World’s Top Reserve Asset, ECB Reports
In a historic development, gold has overtaken US government bonds as the world’s leading reserve asset, according to data from the European Central Bank (ECB).
The ECB reported that gold accounted for 27% of total official foreign reserves at the end of 2025, surpassing US Treasuries at 22% and the euro at 15%.
One year earlier, gold represented 20% of reserves.
The increase was partly driven by central banks purchasing more gold amid rising geopolitical tensions.
In a report on reserve assets, ECB President Christine Lagarde stated:
“Forces of fragmentation are becoming more pronounced. Geopolitical tensions continue to drive strong central bank demand for gold.”
She also noted that the rise in gold holdings is partly due to the metal’s price increase over the past two years, making bullion held by central banks more valuable.
“In nominal terms, the gold price surged by around 60% and 30% in 2025 and 2024 respectively, which mechanically increases the share of gold in total official foreign reserves.”
Adjusting for valuation effects using the gold price at the end of 2023, the euro’s share (16%) remains equal to gold’s (16%), while US Treasuries continue to hold a higher share (26%).
Looking ahead, gold faces limitations as an official reserve asset compared to major fiat currencies: its price volatility, lack of remuneration, and physical storage costs. Additionally, gold supply is not fully elastic and does not adjust seamlessly to shifts in international liquidity demand.
Eurozone Inflation Rises to 3.2%
Inflation across the eurozone increased to its highest level since September 2023, intensifying pressure on the European Central Bank (ECB) to raise interest rates.
Eurozone consumer price inflation reached 3.2% in May, according to a new estimate from Eurostat, up from 3.0% in April.
This acceleration exceeds the ECB’s 2% target and may prompt policymakers to vote for a rate hike at their upcoming meeting.
Energy prices were a major driver, with energy inflation rising to 10.9% in May. Services inflation increased by 3.5% annually, while food, alcohol, and tobacco inflation declined to 2.0%. Industrial goods inflation edged up slightly to 0.9%.
Emeritus professor Joe Nellis, economic adviser at accountancy and advisory firm MHA, said:
“Eurozone inflation rose to 3.2% in May as pressure builds on the European Central Bank to act now to combat rising prices. Despite efforts to control it, underlying price pressures remain strong, with service inflation and wage growth persisting, businesses passing on costs, and global instability driving up energy and transport costs. These factors further strain supply chains across Europe.
With this uptick in inflation, the ECB is increasingly likely to raise interest rates by 0.25 percentage points next week. This marks a shift from earlier expectations that the ECB might ease policy later this year to reignite the sluggish Eurozone economy.”
UK Mortgage Approvals Reach Highest Level Since January 2025
UK mortgage approvals have reached a 15-month high despite the Middle East crisis contributing to increased interest rates.
The Bank of England reported 65,900 mortgage approvals in April, up from nearly 64,000 in March on a seasonally adjusted basis. This is the highest level since January 2025.
However, net borrowing of mortgage debt by individuals declined to £4.4 billion in April from £6.8 billion in March.
Martin Beck, chief economist at WPI Strategy, commented:
“Continued resilience in mortgage lending and housing market activity in April suggests the economic fallout from conflict in the Middle East has not yet hit household borrowing as hard as some feared. Mortgage approvals rose to a 15-month high of 65,945 in April, up from March’s 63,979, while gross mortgage lending was the second-highest level since March 2025.
Household borrowing is proving surprisingly resilient in the face of geopolitical uncertainty, higher inflation risks and tighter financial conditions. The housing market is far from booming, but it is holding up better than the wider economic backdrop might suggest.”
Alphabet Shares Dip Slightly
Shares in Alphabet have declined modestly in pre-market trading as investors assess the company’s planned $80 billion stock sale.
This reaction is mild, indicating traders are not alarmed.
The $80 billion stock sale will not occur all at once. The $40 billion "at-the-market (ATM) offering" will gradually raise funds over time as shares are introduced to the market.
The $30 billion in "aggregate underwritten offerings" will be held by investment banks underwriting the deal, which are unlikely to sell the shares immediately.
Additionally, Berkshire Hathaway is expected to retain its new $10 billion stake, having invested in Alphabet previously.
Alphabet’s shares have increased by 126% over the past year.
UK Youth Unemployment to Approach 18% Amid AI Job Impact
Youth unemployment in the UK is projected to reach nearly 18% next year as AI systems disrupt entry-level jobs.
The British Chambers of Commerce (BCC) forecasts the youth unemployment rate will rise to 16.9% in 2026, up from 16.1% in the final quarter of 2025, and further increase to 17.88% in 2027.
This implies that almost one in five young people could be unemployed next year.
The BCC attributes this trend to higher taxes, minimum wage increases, and the rise of AI, stating:
Youth unemployment remains an area of concern as labour costs and AI erode entry level jobs. It is expected to be 16.9% in 2026, rising to 17.8% in 2027.
With firms facing squeezed margins because of input costs and minimum wage increases, growth in average earnings is forecast to ease from 3.7% by Q4 2026 to 3.3% by the end of 2027.
Last week, former health secretary Alan Milburn warned that the number of young people not in education, employment, or training risks creating a ‘lost generation.’
The BCC also lowered its UK growth forecast for this year to 0.9%, down from a previous estimate of 1.0%.
The Middle East conflict is a major economic drag, with business investment now expected to fall by 2.2% this year, before moving back to –0.1% in 2027.
Third Economic Pole Proposed to Shield from 'Trump Shock'
A new economic alliance between the EU and like-minded Asian partners should be established to protect global economies from a potential “Trump shock,” according to a report by Chatham House, the foreign affairs think tank.
The report was authored by Creon Butler, former director for international economic affairs in the UK National Security Secretariat and a “sous sherpa” at G7 and G20 summits.
It calls for a “third economic pole” initially comprising EU countries and members of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) committed to rules-based trade.
The alliance would exclude the US and China, as the US has diverged from rules-based trade and China has not fully committed to World Trade Organization rules.
“China is far from the only country to behave this way but as the second largest national economy after the US, it has become a highly disruptive influence.”
Creating a “third pole” would enable like-minded nations to preserve and enhance core trade rules within a large economic space, with the EU and CPTPP countries collectively accounting for 32% of global GDP. Other potential members include South Korea, Brazil, Turkey, and South Africa.
“It is likely only a matter of time before the full suite of Trump policies substantially reduces trend growth and economic stability in the US, and possibly the wider world.”
The UK is well positioned to advance this group but is also likely to be among the most affected if current trade disruptions persist. The report emphasizes that the “third pole” is necessary regardless of the US administration.
Troy Hooper, co-head of equity capital markets for the Americas at financial intelligence provider Mergermarket, said Alphabet’s funding plans highlight the intensity of the AI development race.
“For hyperscalers, compute capacity is a direct driver of future revenue.
By leaning into equity, Alphabet is bringing in permanent capital rather than burdening a balance sheet already absorbing record capex [capital expenditure].”
Tech Giants Transition from 'Capital-Light Free Cash Flow Machines'
Details of Alphabet’s $80 billion equity raise include:
Proposed Offerings
- Concurrent underwritten offerings: $30 billion in underwritten public offerings, consisting of $15 billion in depositary shares representing mandatory convertible preferred stock, and $15 billion in Class A Common Stock and Class C Capital Stock.
- At-the-market offering: $40 billion at-the-market (ATM) offering program for Class A Common Stock and Class C Cap...
