Challenging the market with a rare 100-year bond issue, can Alphabet raise funds as planned?

(Mountain View, Feb 10) — As the AI arms race drives unprecedented competition and funding needs, major tech companies are turning to the bond market in size. Alphabet on Monday (9) priced a $20 billion corporate bond deal—above the initial $15 billion plan—after drawing more than $100 billion in orders, signaling investors remain willing (for now) to finance AI expansion through leverage.

Beyond the U.S. dollar deal, Alphabet is also preparing Swiss franc–denominated bonds and plans to issue sterling debt in the UK for the first time, potentially including a rare 100-year “century bond.” If executed, Alphabet would be the first tech company to attempt a century bond since the late-1990s dot-com era. Historically, sterling century bonds have been issued mostly by non-tech institutions such as universities and utilities, with IBM being the notable tech exception in 1996.

The financing push follows peers such as Meta and Amazon in ramping up AI-related capital spending. Those plans have fueled concerns that the AI spending boom—and the debt used to fund it—could strain credit markets. Alphabet’s heavily oversubscribed deal, however, has temporarily muted those worries.

Andrew Dassori, CIO of Wavelength Capital Management, said the market is no longer in a typical capex cycle: companies that used to be net cash accumulators are now tapping debt markets to preserve competitiveness—an important shift for assessing risk and return in U.S. corporate credit.

Bond markets are increasingly central to funding the spending wave. Oracle recently sold $25 billion in bonds, and forecasts suggest U.S. investment-grade issuance could reach about $2.25 trillion this year, a record high. Some credit strategists warn that such large supply could eventually push corporate risk premiums higher.

Alphabet’s U.S. dollar offering spans seven maturities. The 40-year tranche tightened to a spread of about 0.95 percentage points over Treasuries, well below initial price talk near 1.2 points, indicating solid demand for long-dated risk. Shorter maturities were even stronger, with the 3-year tranche tightening to around 0.27 points.

Alphabet has also guided that 2026 capex could reach as much as $185 billion, exceeding the combined total of the previous three years, primarily for data centers, cloud capacity, and AI infrastructure to support products such as Gemini. The company says AI-driven demand is starting to show up in revenue trends, with 2025 annual revenue topping $400 billion for the first time and the latest quarter beating expectations on both revenue and profit.