With Alphabet poised to earn potentially $100 billion or more from its 2015 bet on Elon Musk’s SpaceX, Google CEO Sundar Pichai said the explosion of artificial intelligence has opened the door to more startup investments.
“You know SpaceX, Anthropic and so on so, I think now with the AI shift, there are more opportunities on which we can deploy capital in a good way and so we are doing that,” Pichai said, in a conversation with Stripe co-founder John Collison posted on Tuesday.
Google has long been in the startup investing game through its early-stage venture group GV and its growth arm CapitalG. But with today’s AI companies requiring checks in the hundreds of millions or billions of dollars, Google parent Alphabet is joining other tech giants like Nvidia, Microsoft and Amazon in skirting the venture route and going big off the balance sheet.
Alphabet first invested in SpaceX in 2015, putting in $900 million at a valuation of about $12 billion. In February, SpaceX merged with Musk’s xAI in a deal valued at $1.25 trillion. Assuming Alphabet has held onto all of its shares, its stake would now be worth around $100 billion, and could go up in the coming months.
Last week, SpaceX confidentially filed for an IPO, and the company is reportedly seeking a valuation of $1.75 trillion in what would be a record offering.
Then there’s OpenAI rival Anthropic, which competes with Google at the AI model layer but also partners with the search company by committing to purchase billions of dollars worth of its tensor processing units, or TPUs, and cloud infrastructure.
In 2023, Google invested $300 million in the AI lab for a stake of about 10%. Months later, it poured in another $2 billion. Since then, Anthropic’s valuation has soared from the single-digit billions to $380 billion, as of the last round in February, with Google putting in additional capital along the way.
In total, Google’s investment in Anthropic now exceeds $3 billion, and it reportedly owns a 14% stake in the company.
Pichai’s latest comments suggest that Google may be eyeing additional external investments as its AI returns pile up. He added that the company wants “to be good stewards of capital.”
“To the extent you’re bullish on ROIC, you want to invest every last dollar you can there,” he said, referring to return on invested capital.
In talking to Collison about investing, Pichai was sharing his views with the leader of a portfolio company.
Stripe was valued at $159 billion as of February, up more than 17-fold since GV participated in a $150 million round in 2016. CapitalG is also an investor in the fintech company.
“We felt our investment in Stripe was being a good steward of our capital,” Pichai told Collison.
Pichai also spoke about Waymo, Alphabet’s autonomous vehicle division. Waymo raised its first external investment round in 2020, reeling in $2.25 billion. Earlier this year, Waymo raised a $16 billion funding round, valuing the company at $126 billion, with Alphabet contributing funding alongside a host of outside investors.
When Waymo was first raising money, Alphabet wasn’t putting in the kind of cash at its disposal today.
“I would have been glad to invest more capital in Waymo earlier, but we weren’t at the level of maturity to do that,” Pichai said.
