Alphabet Convertibles Could Yield 6%, But Will Offer No Downside Protection

Alphabet is launching the largest mandatory-convertible preferred-stock deal ever as part of an $80–$85 billion equity raise to fund AI capital spending. The company plans $15 billion of mandatory convertibles—two $7.5 billion tranches convertible into Class A and Class C shares—expected to price at $50 and yield roughly 6.5%. The securities trade as GOOGM/GOOGN on Nasdaq and offer materially higher yield than Alphabet’s 0.2% common dividend, but carry no downside protection and will convert around May 15, 2029. Alphabet is also expected to price $15 billion of common equity and to sell $10 billion of common to Berkshire Hathaway in a private placement. The convertibles’ high delta and 20–25% conversion premium mean they closely track the stock and cap initial upside; they may attract yield-focused investors while increasing equity supply and potential dilution for existing shareholders.