Google’s parent company Alphabet will raise billions, including via century bonds, to finance its massive AI spending on data centres and energy.
NEW YORK: Google-parent Alphabet is turning to the debt markets in a historic way to fund its colossal artificial intelligence ambitions.
According to data published on Tuesday, the tech giant plans to issue bonds maturing in 100 years as part of a broader effort to raise about USD 20 billion.
The Silicon Valley behemoth is reportedly issuing bonds that mature in February 2126. Lenders’ appetite for exposure to the AI boom is immense, with some USD 100 billion in orders placed for the debt issuance.
Alphabet did not respond to a request for comment. The company and its AI race rivals, including Amazon, Meta and Microsoft, are investing staggering sums in the computing infrastructure required to power the technology.
This spending surge is a strategic bet that AI will deliver massive future returns. Market reaction has been mixed, however, with some investors concerned that spending has gone overboard.
Century-long corporate bond issues are exceptionally rare. This move is particularly notable for Alphabet, which has ample online advertising revenue that could theoretically fund investments without resorting to debt.
The intense competition to lead in AI has fundamentally changed the financial calculus. It now demands unprecedented spending on data centres, energy generation and related infrastructure.
Alphabet allocated USD 91 billion to computing infrastructure spending last year. The company has told financial analysts it expects to spend between USD 175 billion and USD 185 billion on it this year.
To manage this spending surge, Alphabet has already ramped up its long-term debt. It issued 50-year bonds late last year.
While 100-year bonds are not a new financial instrument, it has been decades since US companies have utilised them. Corporations like Disney, Coca-Cola, FedEx, Ford and Motorola turned to such century-long debt during the 1990s.