Alphabet goes to the bond market to finance artificial intelligence expansion

Alphabet accelerates on the bond market and joins the long line of large technology groups that are financing the expansion of artificial intelligence infrastructure through debt.

Google's holding company has launched a new investment grade bond issue in the US, structured in up to seven tranches. According to a source familiar with the deal, the longest maturity, a bond reaching 2066, is being offered at an initial premium of about 120 basis points above Treasuries. The details are not public and the person requested anonymity.

The deal comes at a time of strong activity in the credit market by hyperscalers, the large cloud operators that are supporting unprecedented investments in data centres, chips and networks. Overall, the industry is expected to spend over $650 billion this year on AI-related infrastructure. Investor demand for this type of debt has remained high, although questions are beginning to emerge about the sustainability of such an intense spending cycle and the risk of excesses.

Last week alone, Oracle placed USD 25 billion of bonds, raising orders for a record USD 129 billion at the peak of demand. Alphabet, for its part, announced that it will invest up to $185 billion in 2026, a figure well above market expectations, along with quarterly results that exceeded analysts' average estimates compiled by Bloomberg.

In addition to the dollar issue, Alphabet has also instructed banks to evaluate placements in Swiss francs and sterling, including the possibility of a rare bond with a 100-year maturity, according to other sources close to the dossier. The group had already returned to the US bond market back in November, when it raised $17.5 billion with a total demand of around $90 billion, flanking the operation with a €6.5 billion European issue.