Alphabet selling very rare 100-year bonds to help fund AI investment

Source: Ars Technica

Background

Big Tech companies and their suppliers are expected to invest almost $700 billion in AI infrastructure this year and are increasingly turning to the debt markets to finance the giant data‑center build‑out.

Alphabet’s Bond Offering

• In November, Alphabet sold $17.5 billion of bonds in the U.S., including a 50‑year bond—the longest‑dated dollar bond sold by a tech group last year—and raised €6.5 billion on European markets.
• On Monday, the company launched a new offering that featured a three‑year bond and a 40‑year bond.

Market Context

• Oracle raised $25 billion from a bond sale that attracted more than $125 billion of orders.
• Alphabet, Amazon, and Meta have all increased their capital‑expenditure (capex) plans in recent earnings reports, prompting questions about whether cash flows alone can fund the unprecedented spending spree.

Alphabet’s Financial Position

• Last week, Google’s parent company reported annual sales that topped $400 billion for the first time, beating investors’ expectations for revenues and profits in the most recent quarter.
• Alphabet said it plans to spend as much as $185 billion on capex this year—roughly double last year’s total—to capitalize on booming demand for its Gemini AI assistant.
• Long‑term debt rose to $46.5 billion in 2025, more than four times the previous year, while cash and equivalents stood at $126.8 billion at year‑end.

Pricing and Investor Demand

• Investor demand was strongest on the shortest portion of the deal. The three‑year offering priced at 0.27 percentage points above U.S. Treasuries, down from 0.6 percentage points during initial price discussions (according to people familiar with the deal).
• The longest portion, a 40‑year bond, is expected to yield 0.95 percentage points over U.S. Treasuries, down from 1.2 percentage points in early talks.

Bookrunners

• Bank of America, Goldman Sachs, and JPMorgan acted as bookrunners on the bond sales across three currencies. All three declined to comment or did not immediately respond to requests for comment.

Alphabet did not immediately respond to a request for comment.

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