After Issuing $20 Billion in Debt, Google’s 100-Year Bond Issuance Raises Questions: Has AI Drained Its Coffers?

TradingKey - According to a Financial Times report, Google's parent company Alphabet (GOOG) (GOOGL) is planning to issue bonds denominated in sterling and Swiss francs, which may include the first 100-year sterling bond of this century.

The sterling bond issuance plan includes tranches with maturities ranging from 3 to 32 years as well as a 100-year bond; the Swiss franc issuance includes 3, 6, 10, 15, and 25-year tranches, with pricing expected later today.

Previously, Bloomberg reported that Alphabet issued its largest-ever dollar-denominated bond on Monday, raising $20 billion and attracting over $100 billion in orders at its peak, marking one of the strongest records in corporate bond issuance history.

However, Google's recent aggressive borrowing has also raised questions: Why is a cash-rich giant choosing to borrow? Has the AI arms race already drained Google's coffers?

Not Just Google: Tech Giants Flock to the Bond Market to "Borrow"

While corporate bond issuance has become more common amid expanding capital expenditures, Google's latest offering remains exceptional. Data shows that Alphabet's century bond is the first of such ultra-long maturity issued by a tech company since Motorola's issuance in 1997.

Generally, the century bond market is dominated by entities such as governments and universities, with corporations not being primary issuers. KBRA analyst Kerr noted that century bonds are uncommon even in the sovereign market. A 100-year timeframe is exceptionally long; acquisitions, obsolete business models, and technological shifts could cause former giants to fall rapidly, turning corporate debt into worthless paper.

Google's bond issuance aims to leverage market recognition of its credit to secure lower-cost financing. Analysts believe this is closely tied to Google's significant increase in AI investment this year. Recently, Google released capital expenditure guidance for 2026 in the range of $175 billion to $185 billion, nearly double its total 2025 spending and nearly 50% higher than the market expectation of $119.5 billion.

Google last issued dollar-denominated bonds in November last year, raising $17.5 billion and attracting approximately $90 billion in orders. According to data compiled by Bloomberg, the 50-year bond issued in that transaction was the longest-dated dollar-denominated tech corporate bond of last year and has performed well in the secondary market. The company also issued €6.5 billion in bonds in Europe at that time.

In fact, it is not just Google; tech giants across the board are flocking to the bond market to "borrow." According to a report released in January by BofA Securities, Amazon (AMZN) , Google, Meta (META) , Microsoft (MSFT) , and Oracle ( ORCL) collectively issued $121 billion in U.S. corporate bonds last year. Barclays (BCS) analysts estimate that total U.S. corporate bond issuance will reach $2.46 trillion this year, up approximately 11.8% from 2025. Morgan Stanley (MS) even anticipates that this AI-related issuance wave will drive the total annual corporate bond volume to $2.3 trillion.

Market Concerns: Is AI Spending Over-Inflated?

Despite the market's positive reaction to Google's recent bond offerings, concerns have emerged: with century-long debt being used to support current AI investments, has the scale of AI spending become over-inflated?

Since the beginning of the year, Wall Street has widely expected major tech giants to ramp up capital expenditures. Morgan Stanley predicts that capital spending by the four major U.S. cloud service providers (Amazon, Google, Meta, and Microsoft) will rise to $454 billion in 2026, a 26% year-over-year increase.

According to earnings reports, the combined 2026 capital expenditure forecasts for these four companies will reach $660 billion, not only far exceeding the $410 billion combined in 2025 and $245 billion in 2024, but even surpassing Israel's GDP. Jim Tierney, head of AllianceBernstein's concentrated U.S. growth fund, described the scale of capital expenditure as staggering.

Last year, increased AI spending was interpreted as a purely positive signal, but the situation has shifted completely this year. After announcing massive capital expenditures for 2026, the stock prices of these companies plummeted. Google, despite its total revenue hitting consecutive quarterly record highs, saw its shares dive 7.5% after hours, while Microsoft even saw its market value evaporate by $430 billion at one point following its earnings release.

Oracle had already experienced such a scenario last year. Oracle, which saw its stock soar 40% last September after signing a $300 billion order with OpenAI, has now lost $460 billion in market value compared to its peak after taking on hundreds of billions in heavy debt for AI infrastructure. Its bond spreads have slipped to levels on par with junk bonds, and institutions such as Barclays have downgraded Oracle's debt rating to "Underweight."

For investors, the era of blind enthusiasm for AI spending is officially over; they are now more concerned with return on investment (ROI), with Oracle serving as a classic counterexample. While the initial hundred-billion-dollar orders sparked euphoria, the subsequent aggressive borrowing that doubled capital expenditures and turned cash flow negative resulted in the harshest penalties.

Despite financial data showing Google still sits on hundreds of billions in cash and its core business maintains rapid growth, the market has heard the alarm bells. Google's century bonds must now carry the weight of an ever-expanding future.