- Alphabet sold a rare 100-year bond, the first by a tech company since the 1990s, amid massive AI-related capital expenditure.
- The move underscores growing debt issuance by Big Tech to support AI infrastructure, raising questions about risk and returns.
What Happened
Alphabet Inc., the parent company of Google, has issued an unusual 100-year bond as part of a global debt offering aimed at helping fund its burgeoning artificial intelligence spending, according to a Reuters-cited report. The sterling-denominated bond is part of a £5.5 billion ($7.53 billion) sale that includes multiple tranches measured in maturities from the near term through a full century.
The century bond—a debt instrument that does not mature until 2126—raised roughly £1 billion and carried an interest rate of 6.125%. Demand far exceeded supply, with bids about ten times the amount sought, reflecting strong investor interest in long-dated corporate debt, particularly from life insurers and pension funds seeking long-duration assets.
Alongside the rare century issue, Alphabet also sold $20 billion worth of bonds in a seven-part offering denominated in U.S. dollars, with maturities stretching as far as 2066. The bond sales come amid a surge in capital expenditures by Big Tech firms—including Microsoft, Amazon, and Meta—as they pour money into building AI infrastructure such as data centers and specialized chips.
Century bonds are unusual in corporate finance and have typically been the province of governments or regulated utilities with predictable long-term cash flows. The last time a tech company sold such long-dated debt was in 1997, when Motorola issued similar notes.
Also Read: https://btw.media/all/it-infrastructure/cloud-infrastructure-spend-hits-102-6b-as-ai-demand-grows/
Why It’s Important
Alphabet’s 100-year bond sale highlights the mounting financial commitments required to support rapid AI expansion. Technology firms are no longer relying solely on cash flows to fund innovation; instead, they are tapping credit markets to raise large sums quickly. For Alphabet and its peers, this provides immediate capital for AI build-out and infrastructure projects that might otherwise take years to finance internally.
However, the approach carries risks. Ultra-long debt increases exposure to interest-rate fluctuations and economic cycles far into the future. Century bonds, lacking restrictive covenants and guaranteed subsidiary backing, can be less protective for investors compared with traditional corporate bonds. Some analysts question whether this trend could reduce investor protections or set risky precedents in tech-sector debt markets, where returns from AI investments have yet to fully materialize in productivity gains.
The broader trend of corporate borrowing to fund AI also raises questions about capital allocation and fiscal discipline. While investors have shown appetite for long-dated tech debt, the long-term payoff requires tangible returns from the infrastructure and capabilities that this debt finances. As Big Tech’s AI spending continues to climb—with forecasts suggesting hundreds of billions of dollars in cumulative investment across industries—stakeholders will watch closely whether debt-funded growth delivers commensurate economic value or simply amplifies leverage in pursuit of technological leadership.
