Alphabet is re-entering the debt market to bolster its artificial intelligence ambitions, which has revealed potential risks linked to AI advancements and large infrastructure investments. In its recent annual financial disclosure, Google's parent company addressed potential AI impacts on its primary advertising operations and the danger of having 'excess capacity' stemming from major infrastructural commitments.
The company stated in its SEC filing, 'To accommodate the compute capacity needs demanded by AI training and inference, as well as conventional cloud computing services, we are engaging in significant leasing deals with third party operators, which could elevate costs and operational complexity.' Alphabet also noted that major business contracts might increase 'liabilities and obligations if there's a failure by us, our collaborators, or vendors.'
A key figure from Alphabet's earnings report is a projected $185 billion, which marks the upper limit of the company's capital expenditures for this year—more than doubling its 2025 capex.
To fuel its AI pursuits, Alphabet is set to secure $20 billion through a U.S. dollar bond sale, according to individuals familiar with the confidential details. The sale will involve various tranches, notably a century-long bond in sterling. Another source mentioned that the deal is oversubscribed five times over. Bloomberg initially disclosed the debt funding plan, which was projected at $15 billion.
In November, Alphabet orchestrated a $25 billion bond sale as its long-term debt rose to $46.5 billion in 2025. CFO Anat Ashkenazi remarked in the last earnings call that the company aims to progress fiscal responsibility, ensuring significant investments do not risk its strong financial footing.
Responding to questions about executive concerns, CEO Sundar Pichai pinpointed 'compute capacity' as a key issue, further elaborating on challenges such as 'power, land, supply chain constraints,' and the imperative to expand to meet surging demand.