6 ms·

But why finance it at all if you have (I assume) the cash laying around? That seems a tad risky if the bet doesn't work out. Not nitpicking your answer, I just

But why finance it at all if you have (I assume) the cash laying around? That seems a tad risky if the bet doesn't work out. Not nitpicking your answer, I just don't understand.

greesil 5mo ago
If you were anticipating the stock to drop sharply in the future, this may be cheaper.
missedthecue 5mo ago
Offering shares doesn't introduce balance sheet risk like debt does. There is no interest expense. You dilute the shareholders by about 1.67% but if this $80b can be deployed in a way that increases the value of the firm by more than that amount over the long term, it creates value and makes everyone better off, including the diluted shareholders. The risk if it doesn't work out is that everyone gets diluted 1.67%
- exabrial 4mo ago
  Hh I didn't consider that. Produce more shares, have Berkshire buy them up at a lower price than the public, in exchange for capital right now. Berkshire can sell them for a profit later or participate in earnings. And with their shares at a premium right now, great time to do it.
bandrami 5mo ago
You sell equity now if you think equity is going to be worth less in the future
tguedes 4mo ago
They don't have the cash laying around. Their "actual" profit, meaning money added to their bank account after stock buy backs, dividends, employee stock allocations, and capex was $7B. In this statement, their 2025 capex was $91.45B. They expect their 2026 capex to be $180B-190B. And they expect their "2027 capital expenditures to significantly increase compared to 2026." So they simply don't have the money. Up until now, I thought the bubble talks about AI were silly because all these companies were using cash flow to fund their capex. These numbers are so astronomical now that a company that had $132B in net income has to take debt or issue stock to pay for it.

6 ms·

But why finance it at all if you have (I assume) the cash laying around? That seems a tad risky if the bet doesn't work out. Not nitpicking your answer, I just

by exabrial 5mo ago

But why finance it at all if you have (I assume) the cash laying around? That seems a tad risky if the bet doesn't work out. Not nitpicking your answer, I just don't understand.

greesil 5mo ago
If you were anticipating the stock to drop sharply in the future, this may be cheaper.
missedthecue 5mo ago
Offering shares doesn't introduce balance sheet risk like debt does. There is no interest expense. You dilute the shareholders by about 1.67% but if this $80b can be deployed in a way that increases the value of the firm by more than that amount over the long term, it creates value and makes everyone better off, including the diluted shareholders. The risk if it doesn't work out is that everyone gets diluted 1.67%
- exabrial 4mo ago
  Hh I didn't consider that. Produce more shares, have Berkshire buy them up at a lower price than the public, in exchange for capital right now. Berkshire can sell them for a profit later or participate in earnings. And with their shares at a premium right now, great time to do it.
bandrami 5mo ago
You sell equity now if you think equity is going to be worth less in the future
tguedes 4mo ago
They don't have the cash laying around. Their "actual" profit, meaning money added to their bank account after stock buy backs, dividends, employee stock allocations, and capex was $7B. In this statement, their 2025 capex was $91.45B. They expect their 2026 capex to be $180B-190B. And they expect their "2027 capital expenditures to significantly increase compared to 2026." So they simply don't have the money. Up until now, I thought the bubble talks about AI were silly because all these companies were using cash flow to fund their capex. These numbers are so astronomical now that a company that had $132B in net income has to take debt or issue stock to pay for it.