Alphabet plans up to $25B US bond sale to fund AI spending; attracts $115B in orders

Alphabet is tapping debt markets once again as artificial intelligence spending reshapes the financing strategies of the world's biggest technology companies.

The Google parent is seeking to raise between $20 billion and $25 billion through its latest US bond offering, Reuters reported, citing a source familiar with the matter.

The fundraising comes just weeks after the company projected elevated capital expenditure for 2026, a move that unsettled investors despite its continued investment in AI infrastructure.

The company is offering notes in as many as 10 tranches, according to a regulatory filing, with maturities ranging from two years to 40 years.

Bloomberg News first reported the size of the planned issuance.

Investor demand exceeds expectations

Investor appetite for Alphabet's debt appears to remain robust despite growing concerns over the cash demands of artificial intelligence.

Bloomberg reported that the company has attracted about $115 billion in orders for the bond sale, more than four times the targeted issuance size of up to $25 billion, citing people familiar with the matter.

The strong demand suggests bond investors remain confident in Alphabet's long-term financial strength even as the company significantly increases spending on AI infrastructure.

AI spending weighs on free cash flow

The latest debt raise follows a major shift in Alphabet's 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 during the same period last year.

It also forecast capital expenditure of between $195 billion and $205 billion for 2026, reflecting the enormous investments required to expand AI computing capacity.

Alphabet's finance chief has acknowledged that free cash flow will remain under pressure as those investments continue.

The fundraising also comes after Alphabet announced an $80 billion equity raise in June, including an investment from Berkshire Hathaway, before increasing the offering size to nearly $85 billion amid strong investor demand.

Beyond the US market, the company has also issued debt in Japanese yen, Swiss francs and British pounds, including a rare 100-year bond earlier this year.

Big Tech increasingly turns to debt

Alphabet's latest bond sale highlights a broader trend across the technology sector, where companies that once relied almost entirely on internally generated cash are increasingly borrowing to finance AI expansion.

According to a Reuters analysis of LSEG data published last month, Amazon, Alphabet, Meta and Oracle collectively issued about $194 billion of bonds during 2026 through July 7, representing a 79% increase from roughly $108 billion during the same period in 2025.

The surge reflects the scale of investment required to build data centers, AI chips, networking equipment and cloud infrastructure as companies race to expand generative AI capabilities.

Industry estimates suggest Big Tech companies are expected to spend more than $730 billion this year, with AI infrastructure accounting for the bulk of that expenditure.

Debt expected to finance a growing share of AI investments

Analysts expect debt financing to become an increasingly important funding source as AI investment cycles stretch over several years before generating meaningful returns.

According to Goldman Sachs, roughly one-third of hyperscalers' capital expenditure is expected to be debt-financed during 2026.

"So, what that means is that all in, we're bracing for something like $250 billion of direct supply from the hyperscalers, leaving the project finance aside," Amanda Lynam, head of credit strategy research at GS, said.

"And then we expect this to peak next year in 2027, where we expect 35% of CapEx to be debt-financed. And the reason for that is that if you read what these hyperscalers are saying, there's a delay between when they invest and when they can monetize that investment of anywhere from three months to two years," she added.

As AI infrastructure spending accelerates, Alphabet's latest bond offering underscores how even cash-rich technology giants are increasingly turning to debt markets to bridge the gap between record investment today and future AI-driven returns.