Alphabet raises record $20 billion bond sale to fund massive AI spending

Core Viewpoint - Alphabet Inc. is significantly increasing its borrowing to fund its ambitious artificial intelligence initiatives, with strong investor demand for its bond offerings [1][3]. Group 1: Bond Issuance - Alphabet raised $20 billion in its largest US dollar bond sale, exceeding the initial expectation of $15 billion, and received over $100 billion in orders [2][3]. - The bond sale included a rare issuance of 100-year bonds, marking a first for a tech company since the late 1990s [2]. - The bond offering consisted of seven parts, with the longest bond maturing in 2066 yielding 0.95 percentage points above Treasuries, which is a tighter risk premium than previously discussed [6]. Group 2: Capital Expenditures - Alphabet plans to spend up to $185 billion on capital expenditures this year, which is more than its total spending over the past three years combined, focusing on data centers essential for AI [4]. - The overall capital expenditures for the four largest US tech companies are projected to reach approximately $650 billion by 2026, indicating a significant financing boom in the tech sector [5]. Group 3: Market Context - Other tech companies, including Meta and Amazon, are also increasing their spending on AI, contributing to concerns about the impact on credit markets [3]. - Morgan Stanley forecasts that hyperscalers will borrow $400 billion this year, a substantial increase from $165 billion in 2025, which may drive high-grade debt issuance to a record $2.25 trillion [7]. - Capital spending in AI, cloud infrastructure, and data centers is expected to total $3 trillion by 2029, according to Bloomberg Intelligence [12].