Prudential analyst Mark Rowen said he believed the company "is building a war chest for further acquisitions". Google also had $2.95bn (£1.65bn) in cash and cash equivalents as of June 30.
Another analyst, Lauren Rich Fine at Merrill Lynch, said possible targets were Chinese internet company Baidu.com, PVR company TiVo, and internet search and mobile phone services company InfoSpace.
The announcement prompted a 1.79% fall in the price of its existing shares from $284.84 to $279.75 at the close in the US. The new shares to be issued would increase the total number of Google shares by 8%.
Google put its quirky stamp on the issue by deciding to issue exactly 14,159,265 shares, referencing the mathematical figure Pi.
Since it debuted on the stock market at $85 a share on August 19 last year, Google's earnings have surged on the back of the boom in search advertising.
However, it is facing increasingly fierce competition from the likes of Yahoo! and Microsoft and it recently said that its earnings growth may slow. Analysts believe it will embark on an acquisition spree to maintain its growth.
After the market was disappointed by its second-quarter figures, its share price fell back from its record high of $317.
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