Alphabet Inc., the parent of Google, plans to sell a large amount of bonds in what would be one of the biggest corporate-debt offerings on record, the company said Monday. This considerable fund-raising will consist of $17.5 billion in bonds issued in the United States and a separate €6.5 billion (about $7.48 billion) note issuance in European markets, Alphabet’s second significant bond sale in Europe this year. These multi-tranche bond sales range in maturity from 3 to 50 years, with the longer terms offering a spread of about 1.35 percentage points over U.S. Treasuries, reflecting investor demand for Alphabet’s credit risk given its strong credit ratings of Aa2/AA+.
The company intends to use the net proceeds from the bond sales for general corporate purposes, including funding Alphabet’s sizable capital expenditures, expected to range between $91 billion and $93 billion in 2025. It’s a key piece of Alphabet’s strategy to accelerate the development of AI tools and expand its cloud infrastructure as demand rises quickly. The company’s latest earnings report showed third-quarter revenue of $87.5 billion, boosted by cloud and AI-related services. These announcements show Alphabet to be a heavyweight hyperscaler heavily investing in the future AI-enabled data center ecosystem.
These companies’ AI splurge follows a technology trend in which firms are raising capital through the capital markets to fuel aggressive AI pushes — Meta Platforms recently took the lead with an unprecedented $30 billion corporate bond sale. Other tech titans, such as Microsoft and Oracle, have also significantly increased their investments in AI. Alphabet’s strategy involves selling bonds denominated in both dollars and euros to diversify its funding sources and take advantage of favorable market conditions across multiple markets.
Goldman Sachs, HSBC, and JPMorgan are among the large banks acting as joint global coordinators and bookrunners for the bond sale, which Natixis, Crédit Agricole CIB, and Deutsche Bank are also leading. Ultimately, these bonds are expected to price soon, but the pricing terms already suggest strong demand, supported by Alphabet’s solid fundamentals and growth profile. Altogether, this $22 billion bond sale underscores Alphabet’s focus on scaling its AI and cloud infrastructure worldwide, as evidenced by significant investments, such as the recently announced $15 billion AI data hub in India. AI, as the groundbreaking force in tech innovation, is accelerating, and funding initiatives of this magnitude are signals of how big players such as Alphabet continue to raise funds (and compete) in the rush to take AI innovations into new industries around the world.