Feb 10 (Reuters) – Alphabet has sold bonds worth $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 has raised investor concerns as payoffs remain small from the hundreds of billions of dollars U.S. tech giants are pouring into AI.
Their capital expenditure 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.
Last week, Alphabet said it would spend as much as $185 billion this year.
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 February 2 in a securities filing.
The five major AI hyperscalers – Amazon, Google, Meta, Microsoft and 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)
Comments