Google’s parent company, Alphabet, has said it plans to raise up to $80bn (£59bn) in equity to fund its vast artificial intelligence infrastructure investments, raising further questions over the economics of the AI boom.

The move, the largest equity fundraising ever according to analysts, includes a $10bn share sale to the US investment group Berkshire Hathaway, which was led until last year by Warren Buffett.

Alphabet shares fell as much as 4.4% after Wall Street opened. The stock was among the biggest fallers on the tech-heavy Nasdaq index in New York, which dipped almost 0.5%.

Alphabet, which is behind the Gemini system that has been increasing its share of the AI chatbot market, said it would use the money to expand its “world-class AI compute infrastructure to meet its unprecedented customer demand”.

The California-based company said: “AI is driving an expansionary moment for Alphabet. The company is experiencing strong demand for its AI solutions and services from enterprises and consumers, at levels that are exceeding the company’s available supply. By scaling its investments, the company seeks to expand its foundational infrastructure to support the significant growth opportunity ahead.”

Nicholas Hyett, the lead alternatives analyst at Hargreaves Lansdown, said the planned stock sale was much larger than previous secondary share sales, and would also raise more money than the largest stock market flotations, known as initial public offering (IPOs).

“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,” he said. “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 the New York Stock Exchange 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 … and there just aren’t many companies in the world that have the ability to spend that amount of money productively.”

However, such a huge fundraising is also a warning to the markets that for all the many billions of dollars thrown at AI infrastructure, meaningful returns to investors have so far been limited.

Jim Reid, a market strategist at Deutsche Bank, said Alphabet was reminding investors of the “unprecedented scale of the AI spending boom”, adding: “Funding of the AI [capital expenditure] boom is becoming an increasingly key topic for markets.”

The decision to tap Berkshire Hathaway is eye-catching, too. Under Buffett, known as the Sage of Omaha, Berkshire often stepped in to provide funding for companies that needed cash, such as the famous $5bn investment into Goldman Sachs at the height of the financial crisis. Berkshire has been investing in Alphabet since last summer.

In its filing, Alphabet explained that half of the $80bn would be used to “scale AI infrastructure and global compute”, with $40bn set aside to cover “an administrative change to how it meets tax obligations associated with vesting of employee equity awards”.

The fundraising includes a $30bn initial raise alongside the $10bn from Berkshire, and a $40bn flexible drip-feed mechanism that can be used gradually over time, not earmarked for AI investment.

Matt Britzman, a senior equity analyst at Hargreaves Lansdown, said Alphabet’s fundraising was a “clear sign that the AI arms race is moving into a more capital-hungry phase”.

He said: “One thing is abundantly clear. Long gone are the days when the tech giants were capital-light free cashflow machines.”

Alphabet had said previously capital expenditure was expected to reach $180bn to $190bn this year, with another significant step up in 2027.

The Google owner is tapping investors for funding before some of its main AI rivals attempt to join the stock market. Anthropic, which makes the Claude chatbot, popular with software engineers and other business clients, said on Monday it had filed confidentially for an IPO on the US stock market.

After a meteoric rise this year, Anthropic is now valued at $965bn, after raising $65bn in funding, meaning it has leapfrogged OpenAI to become the world’s most valuable startup.

OpenAI and Elon Musk’s SpaceX, which includes the artificial intelligence startup xAI, are also scheduled to go public this year.