AI arms race fuels a financing boom among tech giants; following Meta, Google’s parent company plans to issue over $20 billion in bonds.

Google’s parent company Alphabet Inc. plans to raise about $22 billion in bonds in the US and European markets, making it the latest tech giant to take on massive debt after Meta and Oracle. This highlights how the artificial intelligence (AI) arms race is driving the tech industry into a new financing cycle.

On Monday, November 3rd Eastern time, media reported that Alphabet plans to issue about $15 billion in bonds in the US market and has also launched a €6.5 billion (about $7.48 billion) euro bond issuance. Later reports stated that the company's US dollar bonds attracted about $90 billion in subscription demand. Alphabet set the dollar bond issuance amount at $17.5 billion.

Following Meta’s record-breaking bond issuance last Thursday, Alphabet’s massive bond offering once again demonstrates investors’ strong interest in tech giant bonds. The bond issuance comes less than a week after Alphabet released its earnings report last Wednesday after market close.

Earnings reports show that demand for Google’s cloud computing and AI services surged in the third quarter, with total revenue surpassing the $100 billion mark for the first time in history. Revenue, excluding Traffic Acquisition Costs (TAC), rose 13% year-on-year to $87.5 billion, the fastest growth rate since early 2022. Google Cloud’s revenue soared 34% to over $15 billion, poised to become the company’s second-largest revenue source after search advertising.

When releasing earnings, Alphabet’s management raised its capital expenditure forecast for this year from $85 billion to a record $91-93 billion, aimed at accelerating AI development and data center construction, far exceeding the market’s expectation of $80.67 billion. They also made it clear that company capital expenditure in 2026 will “increase significantly.”

The debt frenzy among tech companies has already begun to affect corporate bond valuations, even causing chain reactions in the US bond market. Bloomberg index data show that the average spread of US investment-grade bonds rose 2 basis points to 78 basis points last Friday. Last week, Wallstreetcn cited analysts saying Meta’s record-sized single corporate bond issuance plans reopened the supply floodgates and contributed to driving up US Treasury yields.

Bond Issuance Exceeds Expectations, Terms Span Up to 50 Years

Alphabet plans to split the US bond issuance into up to eight tranches, with maturities ranging from 3 to 50 years. According to insiders, the longest tranche may yield about 1.35 percentage points above US Treasuries.

The size of the euro bond issuance exceeded expectations by €250 million. The 3-year euro bonds carry a spread of 25 basis points above the benchmark rate, while the 39-year tranche carries a spread of 158 basis points.

This is Alphabet’s first bond issuance in US and European markets since April this year. Moody’s stated in its report on Monday that Alphabet will use the proceeds for general corporate purposes, possibly including repaying some outstanding debt. The bonds are expected to receive Moody’s Aa2 rating, the company’s third-highest credit rating, one level above S&P’s rating.

Alphabet’s US dollar bond issuance is led by banks such as Goldman Sachs, HSBC, JPMorgan, Bank of America, Citigroup, Morgan Stanley, and Wells Fargo. The euro bond issuance is led by Goldman Sachs, HSBC, JPMorgan, BNP Paribas, Crédit Agricole, and Deutsche Bank. Pricing is expected to be completed on Monday.

AI Spending Drives $3 Trillion Tech Investment Plans

Tech companies’ bets on a future powered by giant data centers and massive servers are pushing up AI spending. Morgan Stanley estimates that by 2028, so-called “hyperscale cloud providers”—major tech firms—will invest about $3 trillion in infrastructure like data centers, with about half funded through cash flow.

Alphabet’s latest bond issuance comes as its cloud and AI service demand is surging. The company is investing record amounts to accelerate AI development and further integrate AI into popular products including search.

This borrowing frenzy is becoming a trend in the tech industry. Oracle disclosed in filings to regulators this September that it initiated an $18 billion investment-grade bond issuance. Just over a month later, Meta completed a $30 billion bond issuance last month, the largest high-grade corporate bond issuance this year. Meta’s new bond subscriptions peaked at $125 billion, breaking the $120 billion subscription record set by CVS Health’s 2018 bond offering.

Moody’s Senior Credit Officer Emile El Nems commented: “These companies say they are capacity constrained, and with the potential demand brought by AI computing, you find that tech companies entering the bond market has become a clear trend.”

Increased Supply Sparks Concerns Over Spreads

The surge in tech company debt is already impacting corporate bond valuations. JPMorgan credit strategists Eric Beinstein and Nathaniel Rosenbaum noted in their Monday report that bond issuance may remain active in early November, partly because some frequent issuers haven’t yet entered the market and may want to issue before year end.

“As investors consider recent AI-related bond issues and their impact on 2026 supply pace, there is room for spreads to widen slightly further,” the analysts wrote, “but given yields remain attractive and corporate earnings are strong, it’s hard to see this slight widening develop into a major sell-off.”

Alphabet maintains its leading position in digital services, especially through its Google Search service integrated with the Gemini AI platform. The company also dominates the market through its advertising and YouTube businesses. Emile El Nems said Alphabet, Oracle, and Meta also have lower leverage than their peers, giving them more room to borrow.

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