Google's parent company, Alphabet, is making headlines with its plan to issue a rare 100-year bond, a move unseen in the tech world since the dot-com era. This century bond is part of a larger multi-currency debt offering, including bonds in U.S. dollars and Swiss francs, signaling a major push to fund the company's ambitious artificial intelligence (AI) endeavors.
What is a 100-Year Bond?
A 100-year bond, often called a "century bond," is a debt instrument that matures in 100 years. This means investors won't receive their principal back until 2126. These bonds are uncommon, especially for corporations, because it's difficult to predict a company's financial stability and existence over such a long period. Traditionally, century bonds are issued by governments, universities, or established blue-chip companies with stable cash flows, like Coca-Cola and Walt Disney.
Why is Google Doing This?
The primary reason behind Alphabet's bond issuance is to raise capital for its significant investments in AI infrastructure. The company anticipates spending up to $185 billion on capital expenditures in 2026, nearly double the amount from the previous year. This massive investment is driven by the need for powerful data centers and advanced processors to support its AI initiatives, including Gemini and cloud infrastructure.
According to Wall Street analysts, Alphabet's 100-year bond signals that AI is not just a passing trend but a foundational infrastructure project. By securing long-term funding, Alphabet aims to align its financial strategy with the extended investment horizon required for AI development.
Furthermore, issuing bonds in multiple currencies, including a debut sterling issuance, allows Alphabet to diversify its investor base and tap into different markets. The sterling market, in particular, has strong demand from UK pension funds and insurance companies seeking long-duration assets. A banker involved in the deal noted that sticking to dollar markets alone could create a supply-demand imbalance. Sterling markets may also offer lower interest rates compared to dollar bonds, making the century bond more cost-effective.
Why This Matters
Alphabet's move highlights the escalating AI arms race among tech giants. Companies like Microsoft, Meta, Amazon, and Oracle are also increasing their spending and borrowing to compete in the AI space. Morgan Stanley projects that hyperscalers will borrow a combined $400 billion this year, a significant jump from $165 billion in 2025.
This surge in borrowing could push overall high-grade U.S. corporate bond issuance to a record $2.25 trillion in 2026. While the strong demand for tech debt indicates investor confidence in AI's potential, it also raises concerns about sustainability and long-term returns. Some analysts expect the massive issuance to widen corporate bond spreads.
Alphabet's decision to issue a 100-year bond demonstrates its confidence in its long-term financial health and the transformative power of AI. Despite the inherent risks and uncertainties, the company is betting that its AI investments will generate returns for generations to come. The success of Alphabet's bond offering could encourage other top-tier corporations to consider similar long-term financing strategies, though it's likely to remain an exception rather than a new standard.