Evening digest: Alphabet bond raise, oil jumps as Hormuz risks return

Alphabet moved to raise up to $25 billion through a US bond offering as artificial intelligence spending continues to reshape Big Tech financing strategies.

Memory stocks came under pressure despite better-than-expected earnings from Western Digital and Sandisk, while gold retreated as rising oil prices revived inflation concerns.

Crude oil surged after reports that Iran is reviewing restrictions on vessels transiting the Strait of Hormuz.

Alphabet's bond raise underscores AI funding shift

Alphabet is returning to the debt markets with plans to raise between $20 billion and $25 billion through a multi-tranche US bond offering, according to Reuters.

The issuance comes as the Google parent ramps up investment in artificial intelligence infrastructure, after projecting capital expenditure of $195 billion to $205 billion for 2026.

Investor demand appeared robust, with Bloomberg reporting that the offering attracted roughly $115 billion in orders, more than four times the planned issuance.

The company is issuing notes across as many as 10 maturities ranging from two to 40 years.

The fundraising follows a sharp deterioration in Alphabet's free cash flow profile.

The company reported negative free cash flow of $5.9 billion in the second quarter compared with nearly $25 billion of positive free cash flow a year earlier.

Alphabet also completed an approximately $85 billion equity raise earlier this year after initially targeting $80 billion.

The transaction reflects a broader trend across the technology sector.

Reuters reported that Amazon, Alphabet, Meta and Oracle issued about $194 billion of bonds through early July, up 79% from the same period last year, as hyperscalers increasingly rely on debt to finance AI infrastructure.

Goldman Sachs expects about one-third of hyperscaler capital expenditure to be debt-financed in 2026.

Memory stocks retreat despite solid earnings

AI-related memory stocks remained under pressure after investors reacted cautiously to quarterly outlooks from Western Digital and Sandisk.

Western Digital shares dropped about 12%, while Sandisk fell around 4.7%, even though both companies reported earnings that exceeded analyst expectations and forecast quarterly revenue above Wall Street estimates.

Analysts said expectations had become exceptionally high following strong rallies in AI-related storage companies this year.

Micron Technology recovered much of its earlier losses but still traded lower, while American depositary receipts of SK Hynix fell around 5%.

Seagate Technology also edged lower.

Although Micron derives most of its revenue from DRAM rather than flash memory, the stock has also weakened over the past month after a nearly 700% gain over the previous year as investors reassess the durability of AI spending.

Gold slips as inflation concerns return

Gold prices reversed course after posting their strongest daily gain since February, as renewed gains in oil prices revived inflation concerns.

Spot gold fell 0.19% to around $4,234.76 per ounce after climbing more than 4% on Wednesday to its highest level since mid-June. US gold futures also declined 0.2%.

The reversal followed reports that an Iranian parliamentary committee is reviewing legislation that would restrict US, Israeli and other vessels deemed hostile from transiting the Strait of Hormuz.

Higher crude prices could fuel inflation by increasing energy costs across the economy, potentially reinforcing expectations that the Federal Reserve may keep interest rates higher for longer.

Traders are currently pricing in roughly a 57% probability of a September rate hike and an 84% chance of another increase by December, according to CME FedWatch data.

Silver and platinum also declined during the session, while palladium posted modest gains.

Oil prices climb on Strait of Hormuz tensions

Oil prices rose more than $3 per barrel after reports that Iran is considering legislation that would prohibit US and Israeli vessels from using the Strait of Hormuz and impose fines of up to 20% of cargo value on violators.

Brent crude climbed to about $83.37 per barrel, while West Texas Intermediate advanced to around $78.15.

The proposed restrictions added fresh uncertainty after earlier optimism surrounding diplomatic efforts involving Iran and Oman.

The Strait of Hormuz remains one of the world's most important energy shipping routes, carrying roughly one-fifth of global oil and liquefied natural gas supplies before the conflict began earlier this year.

Markets also continued to monitor broader regional risks.

Yemen's Houthis claimed fresh attacks against Saudi-linked targets, while Gulf crude exports remained well below pre-war levels.

Analysts said the latest geopolitical developments could increase supply risks if tensions continue to escalate.