• Alphabet is tapping debt markets for up to $25 billion, according to sources familiar with the matter.
  • Proceeds will fund AI infrastructure and capital expenditures, amid a broader tech borrowing spree.
  • The multi-tranche sale includes ultra-long maturities, reflecting strong investor appetite.

A Mega Bond Sale for AI

Alphabet Inc. is looking to raise as much as $25 billion through a multi-tranche bond sale, according to people familiar with the matter, marking one of the largest corporate debt offerings this year. The Google parent is capitalizing on robust demand from investors eager to gain exposure to the artificial intelligence boom, which has spurred a wave of capital raising across the tech sector.

The fundraising, which includes tranches of varying maturities, is expected to price later Thursday. Early reports indicated a $15 billion US-dollar portion, but that figure has swelled as additional currencies and an ultra-long 100-year tranche were added, pushing the total toward $30 billion. The company has not commented on the offering, but the move underscores its commitment to expanding AI infrastructure, a key priority for CEO Sundar Pichai.

Alphabet's cloud business and AI initiatives, including its Tensor Processing Units and partnerships with AI startups, require massive capital outlays. The company ended the last quarter with over $100 billion in cash, yet it is choosing to borrow at attractive rates, a strategy that preserves liquidity and takes advantage of low borrowing costs relative to its strong credit rating.

A Wave of AI-Driven Debt

This offering follows a trend among tech giants, including Microsoft and Meta, which have also tapped bond markets to fund AI projects. According to data from Informa Global Markets, AI-related capital expenditures have driven record corporate debt issuance in the first half of the year, with technology companies accounting for a significant share.

The timing is strategic: with the Federal Reserve signaling potential rate cuts later this year, companies are locking in favorable long-term rates. Alphabet's bonds are being offered in multiple currencies, including US dollars, euros, and sterling, to attract a global investor base.

However, not all feedback is positive. Some analysts question whether the massive spending on AI will yield returns, with concerns about regulation and competition. "The market is betting that AI will be the next great growth engine, but there are still many unknowns," said a portfolio manager who declined to be named. "Alphabet's move is bold, but it's not without risk."

Investors, however, seem undeterred. Order books for the offering were reportedly oversubscribed within hours, a sign of confidence in Alphabet's long-term prospects. The company's stock has risen 20% this year, outperforming the broader market, partly on AI optimism.

If successful, the sale will bolster Alphabet's balance sheet and fuel its competitive position in the AI race. It may also encourage other tech players to follow suit, adding to a record year for corporate debt.

This story is developing and may be updated with additional details.

This article was updated to reflect the increased size of the bond sale.