Google parent Alphabet embarks on global bond spree to fund record AI spending
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The Google parent is planning to spend as much as US$185 billion in 2026, more than it has spent in the past three years combined.
PHOTO: BLOOMBERG
NEW YORK - Alphabet is borrowing far and wide to finance the unprecedented spending plan behind its artificial intelligence (AI) ambitions, and investors cannot seem to get enough.
The Google parent raised US$20 billion (S$25.3 billion) in its biggest US dollar bond sale on Feb 9 – more than the US$15 billion initially expected, after racking up one of the biggest order books of all time. It is also planning debut deals in Switzerland and Britain, including a rare sale of 100-year bonds – marking the first time a tech company has tried such an offering since the dot.com frenzy of the late 1990s.
The big borrowing spree comes just days after tech companies ranging from Meta Platforms to Amazon.com said they were ramping up spending to meet their ambitious AI plans. Their plans fanned fears that the AI arms race, and the billions of dollars of debt needed to help fund it, would weigh on credit markets.
Investors appeared to push those concerns to the side on Feb 9, as the Alphabet bond sale drew over US$100 billion of orders.
“Clearly, we’re not in a typical capex (capital expenditure) cycle, and after previously being net savers, the companies involved are now going deep into the well for financing to secure the resources to compete,” said Mr Andrew Dassori, chief investment officer at Wavelength Capital Management.
“This is a major transition, and a critical one when thinking about potential risk and return for corporate bonds in the US.”
Alphabet last week said it is planning for as much as US$185 billion of capital expenditures in 2026,
As other companies known as hyperscalers boost spending too, capital expenditures for the four biggest US tech companies are forecast to reach about US$650 billion in 2026, driving a financing boom and a potentially disruptive technology that could completely reshape the global economy.
A chunk of that spending is being funded in the bond market. Just last week, Oracle raised US$25 billion from a bond that attracted a record US$129 billion of orders at its peak.
Alphabet’s US dollar bond sale on Feb 9 came in seven parts, according to people with direct knowledge of the matter. The yield on the longest portion of the offering – a bond maturing in 2066 – was 0.95 percentage point more than Treasuries, a tighter risk premium than the roughly 1.2 percentage points discussed earlier.
Morgan Stanley expects hyperscalers to borrow US$400 billion in 2026, up from US$165 billion in 2025. The offering spree will likely drive high-grade debt issuance to a record US$2.25 trillion in 2026, Mr Vishwas Patkar, head of US credit strategy at the bank, wrote in a note on Feb 9.
Some credit strategists – including Mr Patkar and JPMorgan Chase’s Mr Nathaniel Rosenbaum – expect the massive issuance to push corporate bond spreads wider.
“We think that the playbook is similar to 1997/1998 or 2005; credit underperforms, but not ‘end of cycle’,” Mr Patkar wrote, referring to a period when defaults rise and credit availability tightens.
Alphabet last tapped the US bond market in November, when it raised US$17.5 billion in a deal that attracted about US$90 billion of orders. As part of that transaction, it sold a 50-year note – the longest corporate tech bond offering in US dollars in 2025, according to Bloomberg-compiled data – which has tightened in secondary markets. The company also sold €6.5 billion (S$9.8 billion) of notes in Europe at the time.
Capital spending on AI, cloud infrastructure and data centres is expected to reach US$3 trillion in aggregate by 2029, according to a Bloomberg Intelligence estimate. BLOOMBERG
