Alphabet Just Borrowed $25 Billion, and $2.5 Billion of It Isn't Due Until 2066

Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) closed a $25 billion senior notes sale on Monday -- ten separate tranches, with maturities running from 2028 all the way out to 2066.

The size isn't the interesting part. Against a market value of about $4.2 trillion, $25 billion is well under 1% of the company. The interesting part, to me, is the shape. About $10 billion of the debt doesn't come due for at least 20 years, and the longest slice, $2.5 billion carrying a 6.5% interest rate, isn't due until August 2066.

That's a 40-year loan, taken out by a company whose servers are worn out, by its own accounting, in about six years.

Google campus. Image source: Alphabet.

The ladder

The fixed-rate tranches step up in cost as they stretch out in time. Alphabet sold $1.25 billion of 4.5% notes due 2028, $2 billion at 4.625% due 2029, $3.5 billion at 4.875% due 2031, and $2.5 billion at 5.2% due 2033. Further out sit $4.5 billion at 5.45% due 2036, $3 billion at 6.25% due 2046, $4.5 billion at 6.375% due 2056, and the $2.5 billion of 6.5% notes due 2066. Two floating-rate tranches totaling $1.25 billion round out the $25 billion, and Alphabet netted about $24.8 billion after fees.

The fixed-rate notes alone will cost about $1.3 billion a year in interest. That sounds like a lot, but it's small for a company whose revenue over the past 12 months came to about $446 billion, up 20% year over year -- and whose operations produced roughly $85 billion of cash in just the first half of 2026.

As for what the money is for, the prospectus is deliberately unspecific: Alphabet said it intends to use the net proceeds for "general corporate purposes, which may include the repayment of outstanding debt." That's the standard language big companies use.

Why a cash machine is borrowing

Alphabet raised its 2026 capital expenditure guidance to $195 billion to $205 billion last month, up from an earlier $180 billion to $190 billion. About 60% of the infrastructure investment has been going to servers, per chief financial officer Anat Ashkenazi, with the rest toward data centers and networking equipment.

The first half shows what that pace does to a balance sheet. Capital spending more than doubled year over year to $80.6 billion in the six months through June, from $39.6 billion. And that outlay nearly matched the $84.9 billion of cash its operations generated over the same stretch. In other words, free cash flow is running close to zero even before dividends go out.

When spending runs that close to cash flow, everything else needs another source. Alphabet's buybacks went to zero (from $28.3 billion in the first half of 2025), and it raised about $56 billion of debt plus roughly $50 billion from sales of common and preferred stock in the first half.

The borrowing is piling up on the balance sheet. Alphabet carried $46.5 billion of long-term debt at the start of 2026 and $98.2 billion by June 30. This sale pushes the figure to roughly $123 billion.

Of course, that's still modest leverage for a company earning what Alphabet earns. But the balance sheet is changing fast: Alphabet entered the year with less than half this much debt.

Six-year machines, 40-year money

Alphabet's own accounting, laid out in its annual report, depreciates servers and network equipment over about six years. Data center and office buildings get seven to 40 years.

And at first, the two look badly mismatched. A bond due in 2066 will outlive this year's servers by more than three decades. The machines bought with 2026's budget could be replaced six or seven times before the principal comes due.

But I'd argue the maturity schedule fits the assets better than it first appears. The 40-year money matches the assets that actually last that long. The buildings, the land, and the power infrastructure are what remain when the chips inside them are swapped out.

So borrowing to 2066 only makes sense if management expects the data centers themselves, as physical places, to be producing revenue for decades -- a bet on the permanence of artificial intelligence (AI) demand, not on any single generation of hardware.

The problem, though, sits in the six-year column. Because most of the spending buys short-lived equipment, this year's roughly $200 billion isn't a one-time bill. Keeping the buildings filled with current hardware means paying a large share of that sum again.

The interest on this debt is easy for Alphabet to carry. The spending it supports is recurring, and each replacement cycle will have to be paid for again.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.