Alphabet joins the Silicon Valley AI bond issuance army: plans to raise $3.5 billion to accelerate AI infrastructure investment pace

Google's parent company Alphabet is joining the growing bond issuance ranks in Silicon Valley to fund its massive investments in artificial intelligence. The tech giant plans to return to the European bond market, issuing multiple batches of bonds to raise at least €3 billion (approximately $3.5 billion), highlighting how the AI arms race is driving industry leaders to seek external financing on an unprecedented scale.

According to media reports citing an informed source, Alphabet is marketing six batches of euro-denominated benchmark bonds in the European market, with maturities ranging from three to thirty-nine years. This marks Alphabet's second foray into the euro bond market within 2025.

The bond issuance comes at a time when demand for cloud services and AI business under Alphabet is surging. The company's latest financial report shows that third-quarter sales rose to $87.5 billion, with product revenue driven by generative AI models increasing by over 200% year-on-year. To meet business growth, Alphabet is undertaking record capital expenditures, expected to total between $91 billion and $93 billion annually.

Alphabet's actions reflect the financing frenzy in the tech industry to support AI development. According to a previous article from Wall Street Insight, recently Oracle's data center launched the "largest scale financing for AI infrastructure", amounting to $38 billion. This will be the largest financing deal for AI infrastructure in the market to date. Meta also plans to issue $25 billion in bonds to support its AI strategy. The enormous capital required to build the next generation of AI infrastructure is prompting tech giants to actively flood the debt market.

Planning to raise $3.5 billion, Alphabet accelerates AI infrastructure investment pace

To maintain its lead in the fierce AI competition, Alphabet is investing record amounts of money. The company expects its capital expenditures for this year to be between $91 billion and $93 billion, with these investments primarily aimed at advancing AI and cloud infrastructure development.

Strong performance growth underpins this massive investment plan. The company's financial report for the previous quarter showed sales reaching $87.5 billion, with product revenue based on Google's generative AI models more than doubling year-on-year. According to media reports citing informed sources, the funds raised from this bond issuance will be used for general corporate purposes, closely related to supporting its capital expenditure plans.

According to individuals familiar with the transaction, the bonds issued by Alphabet are divided into six batches, with a maturity structure covering short-term, medium-term, and long-term from three to thirty-nine years. In the preliminary pricing guidance, the issuance rate for the three-year bonds is approximately the mid-swap rate plus 60 basis points, while the rate for the longest thirty-nine-year bonds is approximately the mid-swap rate plus 190 basis points. **

Analysis indicates that Alphabet, with its Aa2/AA+ credit rating, is able to secure favorable financing conditions in the bond market.

Earlier this year, Alphabet successfully issued €6.75 billion in bonds in the euro market for the first time, receiving a warm reception from the market. This return to the market further reflects its strategy of globalizing its sources of funding. The joint global coordinators and joint bookrunners for this issuance include Goldman Sachs, HSBC, and JPMorgan, while BNP Paribas, Crédit Agricole CIB, and Deutsche Bank also serve as joint bookrunners. The final pricing is expected to be completed later today.

Surge in AI Capital Demand, Tech Giants Flooding into Bond Market

Alphabet is not the only tech company issuing bonds for AI expansion. As the industry's demand for computing power and data centers continues to escalate, tech giants are collectively turning to the bond market for funding. For example, Meta last week hired Citigroup and Morgan Stanley to prepare for a bond sale of $25 billion, with maturities ranging from 5 to 40 years. This will be the largest corporate bond issuance of the year, and its impact has extended beyond the company itself. According to media analysis, Meta's massive bond issuance plan has reopened the corporate bond supply floodgates and has become one of the factors driving U.S. Treasury yields higher.

Oracle's data center has also recently launched the "largest-scale financing for AI infrastructure," amounting to $38 billion. This will be the largest financing deal for artificial intelligence infrastructure in the market to date. This financing will fund two projects developed by Vantage Data Centers, which will ultimately be used by Oracle to support OpenAI's computing power needs, forming part of Oracle's $500 billion AI infrastructure investment plan Stargate, jointly promoted with OpenAI