Alphabet draws dotcom bubble comparisons despite oversubscribed £1B 100-year bond

Alphabet sold bonds that don’t mature until 2126, and got way more interest than it needed. The deal brought in almost ten times the actual amount. Market experts aren’t impressed. They’re calling it a red flag that AI spending has gotten out of control.

Alphabet raised £1 billion on Tuesday through this century bond. Investors put in £9.5 billion in bids. The bond pays about 6% and was the most popular of five different sterling notes the company sold. It’s part of a $20 billion borrowing push across multiple currencies.

This matters because no major tech firm has borrowed that far into the future since the 1990s. Motorola and IBM did similar deals back then, right before the dotcom bubble burst. Motorola was a top 25 US company at the time. Today it ranks 232nd with just $11 billion in sales. IBM and Coca-Cola also sold century bonds around then and lost their grip as new companies took over.

Alphabet needs the money for $185 billion in spending this year. Most of it goes to data centers and AI gear. Amazon, Microsoft, Oracle, and Meta are doing the same thing. Analysts say these companies will borrow around $3 trillion over five years to stay competitive in AI.

Analysts compare AI borrowing to past market bubbles

“If you’re looking for a signal of a top, it does look a bit like a signal of a top,” said Bill Blain from Wind Shift Capital in an interview with CNBC. He called current AI borrowing “off-the-historical scale” and compared it to past bubbles where investors got swept up without thinking through the risks.

Why is Alphabet doing this? A few things. UK pension funds and insurance companies need long-term investments. Selling in sterling keeps Alphabet from flooding the US market, where it already borrowed a lot. Borrowing costs are also cheap right now.

But the risks are serious. Look at the 1990s. Telecom companies raised $1.6 trillion and sold $600 billion in bonds to build internet infrastructure. Demand didn’t match up. They built way more than people needed. Companies went bankrupt. Bond buyers lost huge amounts, sometimes getting back only 20 percent.

AI infrastructure could go the same way

Data centers cost tons to build and run. They need electricity constantly, cooling systems, regular hardware upgrades. If AI demand falls short or tech shifts direction, these buildings become money pits.

Phoenix Group, a big UK pension manager, told CityAM other hyperscalers will “undoubtedly take notice” and do similar deals. If that happens, it confirms fears about market excess. Meta has already raised $30 billion through private credit, while Oracle’s debt has ballooned past $100 billion as Cryptopolitan reported previously.

History says watch out. People who bought Motorola’s century bond in 1997 thought the company was unstoppable. They were wrong. Nobody knows if Alphabet will dominate in 2126. Betting on any company for a hundred years looks like a risky move.

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