Alphabet has sold bonds worth US$20 billion in a seven-part offering, tapping the debt market to fund its surging spending on artificial intelligence infrastructure.
The disclosure on Tuesday underscored Big Tech’s growing appetite for credit, in a shift away from years of relying on strong cash flows to fund investment in new technologies.
The pivot to bond market has raised investor concerns as payoffs have not kept pace with the mounting AI spending from U.S. tech giants, while businesses adopting the technology have so far seen limited productivity gains.
Capital expenditure from Alphabet, Microsoft, Amazon.com and Meta Platforms is expected to total at least $630 billion this year, with most of spending focused on data-centers and the AI chips that power them.
The seven tranches of Alphabet’s notes mature every few years, starting in 2029, and go all the way up to 2066.
The company is also planning a debut sterling offering which could include a rare 100-year bond, according to some media reports.
“Century bonds are usually the preserve of governments or regulated utilities with very predictable cash flows, so this deal shows that, at least for now, investors are willing to take on very long-dated risk tied to AI investment,” said Lale Akoner, global market analyst at eToro.
Alphabet’s announcement follows a $25 billion note sale by Oracle disclosed on Feb. 2 in a securities filing.
The AI hyperscalers – a group that also includes Oracle – issued $121 billion in U.S. corporate bonds last year, according to a January report by BofA Securities.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Arun Koyyur)