Alphabet Bets Big on 100 Years of Debt

Core Viewpoint - Alphabet and Amazon are planning unprecedented capital expenditures, with Alphabet potentially spending up to $185 billion and Amazon $200 billion this year, raising questions about investor willingness to finance these investments [1][2]. Group 1: Capital Expenditure Plans - Alphabet's capital spending could reach $185 billion, while Amazon's may hit $200 billion, marking the highest CapEx in history for such initiatives [1][2]. - Both companies have substantial cash reserves but prefer to raise funds through the market rather than depleting their cash [3]. Group 2: Investor Demand and Bond Issuance - Alphabet initially aimed to raise $15 billion but increased the target to $20 billion due to high investor demand, also planning to issue bonds in British pounds and Swiss francs [3]. - The issuance of a 100-year bond by Alphabet is notable, as such long-term bonds are rare for corporations, typically issued by governments or universities [4]. Group 3: Competitive Landscape - Major tech companies are increasing spending to compete aggressively in the "air race," aiming to secure a leading position in future markets [7][8]. - The competition among Alphabet, Amazon, Microsoft, and Meta is intense, with each company striving to capture significant market share and profits [8]. Group 4: Historical Context and Risks - The rarity of 100-year bonds raises concerns about long-term viability, as seen in past examples like Motorola and J.C. Penney, which faced significant challenges after issuing such bonds [11][12]. - Despite the risks associated with long-term bonds, Alphabet is currently viewed as a strong company with robust growth and aggressive investment strategies [13].