Alphabet Issues 100-Year Bond as Tech Giants Seek AI Funding
The expansion plans for AI infrastructure are exorbitant – and they need to be financed as well. To do this, Google’s parent company Alphabet is now taking a step that is extraordinary for the tech sector, as Bloomberg and the Financial Times report today.
Alphabet has recorded exceptionally high demand in a comprehensive bond issuance. Google’s parent company attracted orders worth more than 100 billion dollars, while the actual issuance in the dollar segment was expanded to 20 billion dollars. Originally, the company had planned a placement of 15 billion dollars but increased the volume due to strong investor demand. The transaction takes place across multiple currencies and includes, in addition to dollar bonds, issuances in British pounds and Swiss francs.
A bond is a fixed-interest security in which you lend money to an issuer (e.g., a state or company) for a defined period and receive regular interest payments in return as well as repayment of the principal at the end.
Particularly noteworthy is the placement of a century bond in the sterling market, with which Alphabet is entering the British bond market for the first time. This extremely long-term financing form is a rarity even for large technology companies. The strategy of tapping into various currency markets aims to expand the investor base and avoid potential overloading of the US dollar market.
Rare financing instrument with few pioneers
Century bonds remain an exceptional phenomenon in the technology sector. IBM had issued such a bond in 1996, while most major technology companies limit themselves to maturities of up to 40 years. In the sterling market, only the University of Oxford, French energy company EDF, and the Wellcome Trust foundation in 2018 have placed century bonds so far.
The instrument could be particularly attractive for life insurers and pension funds that need long-term assets for their obligations. However, some asset managers also expressed reluctance due to insufficient returns and concerns about overweighting companies with complex financial obligations related to AI investments.
The massive borrowing is directly linked to unprecedented investments in artificial intelligence. Alphabet plans capital expenditures of up to 185 billion dollars for the current year, which represents nearly a doubling compared to the previous year. The company is responding to booming demand for its Gemini AI assistant and is massively expanding its data center infrastructure.
The group’s long-term debt rose to 46.5 billion dollars in 2025, more than four times the previous year, while cash and equivalents of 126.8 billion dollars were available at year-end. As early as November, Alphabet had raised 17.5 billion dollars in the US market and 6.5 billion euros in European markets.
Strong demand pushes risk premiums down
Investor demand was particularly strong for shorter maturities. A three-year bond was ultimately placed at a premium of only 0.27 percentage points over US government bonds, after initial price discussions had mentioned 0.6 percentage points. For the longest tranche, a 40-year bond, the expected yield spread fell from originally 1.2 percentage points to 0.95 percentage points over US Treasuries. Bank of America, Goldman Sachs, and JPMorgan served as lead managers for the issuances in all three currencies.
Alphabet is not alone with its financing offensive. Large technology companies and their suppliers are expected to invest nearly 700 billion dollars in AI infrastructure this year and are increasingly turning to bond markets to finance the massive expansion of data centers. Oracle had just raised 25 billion dollars with a bond the previous week that attracted orders of 125 billion dollars. Amazon and Meta have also increased their investment plans in their latest quarterly reports, raising questions about whether companies will be able to manage the unprecedented spending wave from their operating cash flows alone. Alphabet recently reported annual revenue exceeding 400 billion dollars for the first time, thereby exceeding investor expectations for both revenue and profit.
