Alphabet Inc. is tapping the US high-grade bond market, adding to a borrowing spree by companies at the forefront of the artificial intelligence investment boom.
Google’s parent company is selling bonds in as many as seven tranches, according to a person with knowledge of the matter. Initial price discussions for the longest portion of the deal—a bond maturing in 2066—are at a premium of about 1.2 percentage points above Treasuries, the person said, requesting anonymity due to the private nature of the information.
Hyperscalers—large cloud-computing companies—are expected to spend more than $650 billion this year to expand artificial intelligence infrastructure. Since last year, these firms have flooded the bond market with debt that investors have so far readily absorbed, although concerns are mounting that excessive AI spending may be fuelling a bubble.
Just last week, Oracle Corp. raised $25 billion through a bond sale that attracted a record $129 billion of orders at its peak.
Alphabet said last week that it plans to spend as much as $185 billion this year, far exceeding forecasts. The company also reported fourth-quarter earnings that beat the average of analyst estimates compiled by Bloomberg.
In addition to the US dollar bond offering, Alphabet has mandated banks for potential Swiss franc and sterling debt sales, including a rare 100-year note, according to people familiar with the matter.
The technology firm last tapped the US bond market in November, raising $17.5 billion in a deal that drew about $90 billion of orders. It also sold €6.5 billion of notes in Europe at the time.
Capital expenditure on artificial intelligence, cloud infrastructure and data centres is projected to reach $3 trillion in aggregate by 2029, according to a Bloomberg Intelligence estimate.
