Alphabet borrowed $25bn for AI. Even it had to pay up

Alphabet sold $25bn of investment-grade bonds on Thursday, one of the largest AI-related debt deals of the year. The sale drew about $115bn of peak demand, behind only Oracle and Amazon deals earlier in 2026. It came in 10 tranches, with maturities running from two to 40 years.

The enthusiasm had a catch. To pull buyers in, Alphabet offered what bankers call a new-issue concession: higher yields than some of its own outstanding bonds. The premium on the longest bond started at 1.55 percentage points over US Treasuries before settling at 1.3. And Alphabet told investors, through its dealers, that it now plans to tap the US bond market twice a year.

Why the richest company in tech is borrowing

The context is a spending bill that has grown enormous. Alphabet has raised its 2026 capital budget to as much as $205bn, more than double last year. In July it posted its first negative free cash flow since its 2004 stock-market debut. Cash alone no longer covers the bill.

So Alphabet has become a serial issuer. It has sold more than $114bn of debt since the start of 2025, the most of any AI-related borrower, in dollars, euros, pounds, francs, yen and Canadian dollars, plus a rare 100-year bond. In June it raised nearly $85bn in shares too, including an investment from Warren Buffett’s Berkshire Hathaway.

It is not alone. Amazon has run the same $25bn play, Nvidia returned to the bond market for the first time since 2021, and the wider AI-debt boom now runs to hundreds of billions. Hyperscalers issued about $194bn of bonds in the first seven months of 2026, up nearly 80% on a year earlier.

A vote of confidence, at a price

Weeks ago the mood was darker. Alphabet’s bigger spending plan helped trigger a July selloff in tech bonds, and appetite for AI-linked debt cooled. A SpaceX bond saw its spreads widen, and a Meta data-centre deal drew a lukewarm response. Thursday’s order book suggests the market has warmed again, at least for the strongest names.

For all the borrowing, Alphabet is not stretched. Investors reading its accounts put its net cash near $49bn, and its debt at about 0.6 times operating profit. This is a choice to fund AI with cheap debt rather than sell more stock or drain the bank. It is not a sign of strain.

Still, the shape of the deal is the tell. The most cash-rich firm in technology is now paying a premium to borrow, twice a year, to keep pace with AI. When even Alphabet has to sweeten the terms, the size of the industry’s bill is hard to miss.