Vast amounts of cash get moved from Investors to Big Tech via equity and debt sales to be spent in the real economy.

By Wolf Richter for WOLF STREET.

Intel announced today that it plans an offering of $15 billion in common stock, with underwriters receiving an option for an additional $2.25 billion in common stock, for a potential total of $17.25 billion in share sales.

The SEC filing left the number of shares to be sold blank – the shares have not been priced yet – but at this morning’s share price of $98 a share immediately after the announcement, the total offering would amount to an additional 176 million shares, which would bring the total share count to 5.22 billion, up by 19% from a year ago.

With today’s announcement, Intel is becoming the latest tech company to sell shares at extremely high prices. The price of Intel’s shares have shot up by 380% over the past 12 months, fueled by AI investment mania – which is the perfect time for anyone to sell shares. Big Tech has figured it out. And the economy is benefitting, though maybe not investors.

That’s the opposite of share buybacks. Intel was one of the share buyback queens, having incinerated $94 billion on share buybacks between 2008 and Q1 2021, when it stopped the practice.

The chart below of shares outstanding shows the decline of the share count from 2017 through Q1 2021 due to share buybacks; then the increase in share count due to the dilutive effects of stock compensation packages and stock-funded acquisitions no longer covered up by share buybacks; then in 2025, the mega-sale of shares to the government; and then the estimated effects of today’s offering, including the additional allocation to underwriters, at this morning’s stock price (WOLF STREET estimate, blue segment).

In the press release, Intel said:

“Intel intends to use the net proceeds from the offering for general corporate purposes, which may include, but are not limited to, capital expenditures and working capital.

“The offering is intended to further enable Intel to pursue the growth opportunities ahead while maintaining a strong balance sheet and its commitment to an investment-grade rating.”

The strategy of ending share buybacks (burning cash) – Alphabet, Oracle, Amazon, and Meta also stopped share buybacks – and flipping to selling shares (raising cash) has become one of the methods with which companies are funding the enormous cash burn of building the AI ecosystem, including semiconductor plants and the exponential surge in costs of data centers.

The other methods of funding the cash burn of building the AI ecosystem include prodigious amounts of bond sales. In addition, Big Tech is using cash already on the balance sheet, and using cash flow.

It’s stimulative for the economy that companies sell shares at extremely high prices – including startups from the first round of funding all the way to the IPO – and sell prodigious amounts of debt, thereby moving vast quantities of cash from investors of all stripes to corporate balance sheets. That cash then gets disbursed in the real economy, from pay packages to the construction of data centers and factories, from where it begins to circulate to the rest of the economy.

To some extent, this process has always been going on, but the amounts are now huge, and the announcements of huge deals to raise cash from investors to be spent in the economy are coming one after the other, by the biggest companies in the world. As long as this heavy flow of cash from Investors via Corporate America to the real economy persists, the economy will be stimulated, and demand will be stimulated, and inflation pressures will be stimulated.

The thing to watch for is the moment when this heavy flow of cash from investors into the real economy begins to dry up. But that’s not happening yet.

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